Co-insurance

Businesses are required frequently on commercial properties to insure to a specified percentage of the total value, such as a $1,000,000 building with a 90% co-insurance clause, must insure for a $900,000 coverage. Failure to do so, would result in the insured becoming a co-insurer.

In the example above, if he was carrying only $600,000 insurance coverage, he would be insured for 2/3 of the specified amount and would collect, a maximum of 2/3's of any claim up to the policy limit. The deductible would also apply, further reducing the amount left to rebuild. This co-insurance can also be applied to equipment, machinery and contents.

In challenging economic times it is important that you do not find yourself under-insured and without adequate funds to rebuild. At the same time you do not want to be over-insured with inflated values for the machinery, equipment, stock or contents.

Work with your agent or broker to be sure that the values are correct. You can review your coverage on a regular basis - do what you need to keep yourself up-to-date.