Coinsurance Requirement

What Does Coinsurance Requirement Mean?

The coinsurance requirement is the amount of money an insured person must pay to the insurer to be covered for a partial or total loss. This amount is calculated as a percentage of the actual value of the insured item, which is typically property.

Insuranceopedia Explains Coinsurance Requirement

The value of real estate often appreciates in the market over time. This is an important consideration when purchasing insurance, as insurance companies appraise the property’s value at the time of a loss rather than at the time the insurance is bought. This appraisal is then compared to the coinsurance requirement. If the amount the insured has paid is less than the required percentage based on the property’s value at the time of loss, the insured will have to pay out of pocket for a portion of the loss that the insurance will not cover.