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Co-Insurance

Commercial insurance contracts include a clause called the co-insurance.  This requires the amount of the insurance to be as close as possible to the replacement value of your building or your goods.

Your insurance policy may indicate, for example: P.R. 80%.  This means that the insurer requires the chosen amount to be at least 80% of the full replacement value of the insured item. You have a margin error of only 20%.

What would happen if this guideline imposed by the insurer is not respected?

At the time of a loss, if the percentage indicated by the co-insurance has not been respected, you will be loosing a lot.

Before paying for your loss, the insurer will make a calculation involving the new value of your item versus the assured value, and you will receive a prorated amount.

To be clear: an insurer will never pay more than the amount indicated in your contract. Therefore, in the case of a total loss, if you had opted to insure your building for half of the cost of rebuilding it, you will receive at best that half. By saving a few hundred dollars, you could lose many thousands.

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Whatever the nature of your business, we can advise you on the best set of protections available.

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