co-insurance question

[Jeff Berlin]

Hi BP,

I need help translating and understanding co-insurance. I am about to close on a multi-family property out-of state and need to bind insurance coverage immediately. After going through the process of finding a policy that did not kill my cash-flow, I read through the declarations page and found that the policy had a 100% co-insurance clause. There is significant liability with co-insurance - see like below:

http://www.viainsurance.com/blog/bid/50082/What-Does-CoInsurance-Mean-and-Why-Is-It-Important

So I contacted the insurance broker and had them remove the co-insurance which meant they increased the value of the property insuring to the full replacement cost estimator value - raising the premiums slightly. When I got the new declarations page back - it still listed the co-insurance at 100%. I asked the agent for an explanation and he said that the definitions page of the policy removes the co-insurance as an agreed value coverage.

Anyone who understands this language below - please help translate.

The declarations page will show the 100% coinsurance however there is another additional “Optional Coverage” clause as shown below that then eliminates that in the definitions section of the actual policy. Just a technicality in the way their system works but as shown below you will have coverage at the Agreed Value no coinsurance. Hope this helps explain! Let me know if you need anything. Yes I should have mentioned that, the policy will show the coinsurance of 100% however this is insured to agreed value so the following optional coverage condition applies per the  Building and Personal Property Coverage Form."

G. optional coverages

If shown as applicable in the Declarations, the following optional coverages apply separately to each item:

1. Agreed Value

a. The additional condition, coinsurance, does not apply to Covered Property to which this Optional Coverage applies.  We will pay no more for loss of, or damage to that property than the proportion that the Limit of Insurance under this Coverage Part for the property bears to the Agreed Value shown for it in the Declarations.

b. If the expiration date for this Optional Coverage shown in the Declarations is not extended, the Additional Condition, Coinsurance, is reinstated and this Optional Coverage expires.

c. The terms of this Optional Coverage apply only to loss or damage that occurs:

(1) On or after the effective date of this Optional Coverage: and

(2) Before the Agreed Value expiration date shown in the Declarations or the policy expiration date, whichever occurs first.

Its a bunch of double-talk. what does pay no more for loss of, than the proportion that the limit bears to the agreed value.... what does proportion mean??? It sounds like i still have co-insurance and there is a risk that I won't be paid the full value on a loss.

Any advice would be greatly appreciated.

thank you!