Waiver Of Coinsurance Clause
 |
Definition of 'Waiver Of Coinsurance Clause 'Language in an insurance policy that says the insurance company will not require application of the part of the policy that divides responsibility for an insured loss between the insurance company and the policyholder. The coinsurance clause is usually only waived for small losses, such as losses under $10,000. Coinsurance helps to guard against the moral hazard that the policyholder will not purchase sufficient insurance to cover a total loss in order to save money on insurance premiums. |
 |
Investopedia explains 'Waiver Of Coinsurance Clause 'A coinsurance clause requires the policyholder to insure a certain minimum percentage of the property's actual value, such as 80%. Thus, if a building was worth $200,000, the property owner would have to purchase $160,000 of insurance on it. In the event of a total loss, the policy would pay $160,000 and the building owner would be responsible for the remaining $40,000. If, however, the property were really worth $300,000, the building should have been insured for at least 80% or $240,000. Since the owner is only insured for $160,000 when he should be insured for $240,000, he is underinsured and would face a penalty in the event of a loss, unless he has a waiver of coinsurance clause. |
Related Definitions
Articles Of Interest
-
Is Your Insurance Company Going Belly Up?
When insurance companies go bankrupt or face financial difficulty, it's bad news for policy holders. -
How To Insure Your Most Important Asset - Yourself
Insuring your human capital is something often overlooked. Don't make the mistake of leaving your biggest asset unprotected. -
Don't Get Sued: 5 Tips To Protect Your Small Business
Find out what you can do to limit risk and keep your business running smoothly. -
15 Insurance Policies You Don't Need
Learn how to save money by saying "no" to unnecessary coverage. -
Filling The Gaps In General Liability Insurance
Standard liability coverage may not be enough. Special needs call for specialized policies. -
How does the 80% rule for home insurance work, and how do capital improvements affect it?
The 80% rule refers to the fact that most insurance companies will not fully cover the cost of damage to a house due to the occurrence of an insured event (e.g. fire or flood), unless the homeowner ... -
5 Things You Should Know About The New Health Insurance Marketplace
Here are five things you should know about the new Health Insurance Marketplace (AKA Health Insurance Exchange), which launches on October 1. -
Beware These Disaster-Related Scams
Con artists prey on the weak. Those who just survived a natural disaster can be easy targets. -
Can my insurance company refuse me coverage?
Insurance isn't always as straightforward as other products. Insurers can deny coverage in many different instances:Non-Renewal An insurance company is not obligated to renew an insurance policy ... -
How Much Will Hurricane Sandy Cost Insurance Companies?
Hurricane Sandy's economic cost is staggering, but insurance companies will be paying out less than you might think.
Free Annual Reports