What does coinsurance require in order for partial losses to be paid in full?

Coinsurance is a property insurance clause that encourages policyholders to insure their property for a value that is close to its complete replacement cost or actual cash value at the time of the loss. If a property is not insured to the required coinsurance percentage, the insurer may penalize the insured by prorating the claim payment based on the amount of insurance carried relative to the property's value.

When it comes to partial losses, the requirement to carry a minimum specified amount of the property’s replacement cost is crucial. This ensures that, in the event of a claim, the insurer will provide adequate coverage and fulfill the policyholder's needs. The coinsurance percentage, often set at 80%, 90%, or 100%, signifies the minimum amount the property should be insured for regarding its replacement cost. Therefore, having insurance that meets or exceeds this benchmark is what allows for a full payment of partial losses.

By explaining this requirement, it becomes clear why carrying a minimum specified amount of the property’s replacement cost is the key factor in receiving full payment for partial losses under a coinsurance agreement.