Which statement best describes coinsurance in a property policy?

• A. The insured pays a fixed percentage of the loss after the deductible, sharing risk with the insurer and often lowering the premium.
• B. A separate deductible that applies per claim.
• C. A defined limit that cannot be exceeded.
• D. Insurance coverage that excludes certain losses.

Answer: (A)

Coinsurance in a property policy is a provision that requires the insured to carry a minimum amount of insurance relative to the property's value, so losses are shared between insured and insurer if that level isn’t met. When the insured meets the required percentage, the claim is paid up to the policy limit; if not, the loss is paid proportionally, with the insured bearing a portion of the cost. This shared-risk mechanism can also lead to a lower premium since the insured is taking on more of the risk themselves. The option that describes the insured paying a fixed percentage of the loss after the deductible captures this sense of sharing risk and bearing part of the loss, potentially with a lower premium. The other statements describe a separate deductible, a defined policy limit, and exclusions, which are different concepts.