Difference in Conditions Coverage: What Is It and Who Needs It?

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Coinsurance

DIC policies ordinarily do not contain a coinsurance provision. Actually, a coinsurance requirement could have a serious adverse effect on the insured at the time of loss. In actual practice, DIC policies often provide coverage at limits that are much less than the full value of the property because full coverage for flood and earthquake exposures simply may not be available. With a coinsurance or insurance to value requirement, the insured would likely incur a significant penalty for not meeting the insurance to value requirement. The reality is that in many cases, the limit of insurance will reflect only a partial value of the property because this is all that can be obtained. DIC policies usually do not contain a coinsurance clause for this reason.

“...a coinsurance requirement could have a serious adverse effect on the insured at the time of loss. In actual practice, DIC policies often provide coverage at limits that are much less than the full value of the property because full coverage for flood and earthquake exposures simply may not be available.”


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