What does co-insurance require from the insured in property insurance?

Co-insurance in property insurance requires the insured to carry a minimum percentage of the property's value. This means that in the event of a loss, the insured must have coverage that meets or exceeds a specified percentage of the property's total value, which is often set at 80%, 90%, or 100%. The purpose of co-insurance is to ensure that the insured has a financial stake in the property and that adequate coverage is maintained. If the insured fails to meet this requirement at the time of a loss, they may face a penalty in the form of reduced compensation.

Meeting the co-insurance requirement helps to ensure that property owners adequately insure their property relative to its value, which can minimize underinsurance and promote proper risk management. This principle encourages policyholders to insure their property to its full value, thus supporting the overall stability of the insurance pool.