Quiz 10: Protecting Your Property Part V: Managing Investments
Co-insurance provided in property insurance contract specifies a percentage of coverage on the property. It is the limit up to which the insurance company reimburses the losses and the property owner becomes the co-insurer for the amount above the policy limits. In the given case, Mrs. MB should go for 90% co-insurance coverage rather than 80% of the policy coverage of $150,000 for her house. The reason being that by option for 90% the policy limit would be $135,000 (90% of $150,000) instead of $120,000 (80% of $ 150,000). The policy limit and insurance coverage would therefore be higher at 90% and the amount to be borne by Mrs. MB would only be $15,000 rather than for 80% co-insurance for which it would be $30,000 .
a. The policy has an 80% co-insurance clause which equals to $ 200,000 (80% of $ 250,000) and the insured amount of $ 210,000 is higher than the above. Hence the insurance cover is sufficient. b. A Total of 50% coverage is available for C. Hence, Mr. S can claim up to $105,000 (50% of $ 210,000) for the stolen items. The actual amount that can be claimed is as follows- c. Mr. S should decrease the insurance coverage from $ 210,000 to $ 200,000 as the co-insurance clause requires 80% share. This would allow him to reduce the premium payable on the insurance.
F is of the view that they should not take renter's insurance whereas S is of the view that some expensive items such as computers and stereo equipment's should be covered. In such case, it is advisable for them not to go for the renter's insurance and rather take up a personal Scheduled Property Floater Insurance. This insurance lists the items covered in its schedule and provides coverage for expensive items. This would allow the coverage of the expensive items with low premium payments.