You need to know the coverage limit as well. Do you have the book "General Lines Agent and Customer Representative Study manual? It is on page 27.

 

First, take the value of the property (100,000) and multiply by the Coinsurance percentage (80%). Well I've notice they usually use 80%.

 

100,000 * 0.8 = 80,000

If it meets the requirement of the coinsurance clause divide the coverage limit by 80,000, then mulitply the loss (240,000)

 

The requirement of the coinsurance clause would be the coverage is greater than or equal to 80% of the Property Value.

 

Hople that helps.

Hi Kathy, Coinsurance can be confusing! You have to work coinsurance questions by following these steps – in this order: 1. Multiply the value of the property by the coinsurance percent (usually 80%) 2. Divide the amount of insurance currently on the property by the answer from #1 3. Multiply the answer from #2 by the amount of the loss Example: 1. $100,000 X 80% = $80,000 (The property should have been insured for this amount.) 2. Divide $60,000 (actual coverage) by $80,000 = .75 3. Multiply .75 by $24,000 (the loss) = $18,000 You must do the math in this order to get the correct answer. Give it a try and let me know. Jan