How Coinsurance Can Affect Commercial Property Coverage
Commercial property owners may not always take the time to understand the coinsurance clause in their commercial property insurance policy. Typically, it is one of the most misunderstood terms in insurance. Everyone understands the concept of coinsurance when it’s time to pay a doctor or dentist, but when it comes to commercial property insurance, coinsurance can get seemingly more complicated.
Most commercial property policies have a coinsurance clause. In this context, coinsurance is the percentage of value that the policyholder is required to insure his or her property for. If you have a building valued at $1 million and your policy has a 70 percent coinsurance clause, that means you are supposed to insure the building for at least $700,000. Keep in mind, however, that “value” is determined at the time of loss, and if the amount of insurance you’ve purchased is less than the coinsurance percentage in the policy, a penalty is applied, reducing the claim payment.
When it comes to commercial property coinsurance, the devil is definitely in the details. Work closely with a trusted insurance agent to ensure that your building and property are protected through the right coverage.
Do you have the commercial insurance you need to protect your business? Make sure you do by contacting the experts at Nahai Insurance Services. We can assess your unique business and its unique risks, then craft you the right property coverage so you can have the protection you need at the premiums you deserve.