What is Coinsurance?

Coinsurance is mathematical calculation used by insurance companies during a claim to determine if the business property is insured to a specific value.  Insurance policies will express coinsurance as a percentage such as 80%, 90%, or 100%.

For example, a cannabis licensee may insure their grow equipment for $500,000 with a 80% coinsurance factor.  A retail marijuana store might insure the building for $350,000 and cannabis stock for $100,000 with a 90% coinsurance percentage.

Why Should I Care About Coinsurance?

Unaware or incorrectly advised business personal property values might cost you more money after a claim.  The consequence of not being insured to the actual value of the property can result in a reduced claim settlement.     

How is Coinsurance Calculated?

The value of the business personal property is multiplied by the coinsurance percentage to equal a minimum insurable value.  The insurable value is divided by the amount of business personal property insurance coverage on the policy to equal a ratio.  The ratio is multiplied by the amount of your claim or loss and decreased by the amount of your deductible.    

Example of Under Insured 

Example of Adequate Insurance