In Property insurance, Coinsurance is

Question

Question: In Property insurance, Coinsurance is

Options:

1.  An agreement between two or more insurers to equally share the costs of large losses
2.  A contractual agreement to make the insured bear a portion (usually small) of every loss
3.  A contract agreement to help equalize total claims to reinsurance premiums
4.  A contractual agreement to discourage under-insurance
5.  A contractual agreement to prevent first-dollar coverage on small Nuisance claim above the disappearing deductible

Answer 1

4. A contractual agreement to discourage under-insurance

In property insurance, coinsurance is a contractual agreement to discourage under-insurance.

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More information:

Coinsurance is an agreement between an insurance company and a business owner to share the costs of a claim.

The policy owner is required to hold a high insurance limit sufficient to cover a percentage of the property value in order to receive full compensation in the event of loss or damage to property.