Auto Insurance Houston
English Insurance Carriers

business meetingWhy do I have to carry so much insurance on my property?

This is a great question, and one that customers ask frequently.

Your policy contains what is called a coinsurance provision.  Coinsurance is essentially an agreement between you and the insurance company.  In exchange for your agreement to insure the property for at least a specified percentage of its actual value, the company agrees to issue the policy for a lower premium than it would charge for a policy without a coinsurance provision. 

After a loss – even a small loss – if the amount of insurance on your property isn’t sufficient to satisfy your part of the agreement, then the insurance company can reduce the amount it would normally pay.  For instance, if your insurance policy contained an 80% coinsurance clause, then you would be responsible to carry an amount of insurance on your property at the very least 80% of the value.  If you had a claim, and it was determined you did not insure the property for at least 80% of the value, your insurance company would reduce the amount of your claim proportionately to the percentage you carried. 

For example, suppose your commercial building was valued at $100,000, but you choose to only insure it for $50,000, which is half the actual value of the property.  If you were to have a claim for $10,000, you would only be paid $5,000 (half the claim amount) less any applicable deductible. 

However, if you insured the commercial building for $80,000 (80% of the building’s value) you would not be penalized and would receive a claim check for $10,000 less any applicable deductible.

Do remember though, a coinsurance clause should not be an enticement to insure your property for less than the actual value.  In the event of a total loss, the maximum amount the policy will pay for your property is the amount you insured it for.

While it is your responsibility to establish the value of your property and select the amount of insurance for your policy, we can help with that decision and explain what you can do to avoid a loss penalty.

For a Houston commercial property insurance quote, give us a call at 713-782-2886.

Share |

No Comments

Post a Comment
Required (Not Displayed)

All comments are moderated and stripped of HTML.
Submission Validation
Change the CAPTCHA codeSpeak the CAPTCHA code
Enter the Validation Code from above.
NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
  Personal Insurance
Auto Insurance Houston
Home Insurance Houston
Condo Insurance Houston
Renters Insurance Houston
Motorcycle Insurance
Boat Insurance Houston
Flood Insurance Houston
Health Insurance
Life Insurance
Texas SR-22 Insurance
Texas RV Insurance
Texas Umbrella Insurance
Commercial Insurance
Commercial Auto Insurance
General Liability Insurance
Commercial Property Insurance
Tenant Liability Insurance
Landlord Risk Insurance
Texas Workers Compensation Insurance
Texas Garage Liability Insurance
Texas Auto Dealer Insurance

Surety & Fidelity Bonds
Auto Dealer Bond
Auto Title Bond
Dishonesty Bond
Tax Bond
TABC Liquor Bond
License & Permit Bond 

© 2010 ABC Insurance Services Inc, All rights reserved.
8811 Westheimer Ste 211, Houston, Texas 77063 | (Phone) 800-374-9227 | (Fax) 713-785-2711

Free Houston Texas Insurance Quotes
 Privacy Policy