Waiver Of Coinsurance Clause

What Does Waiver Of Coinsurance Clause Mean?

A waiver of coinsurance clause in an insurance contract eliminates the policyholder’s obligation to pay coinsurance in the event of a total loss. In many property insurance contracts, the policyholder typically receives 80-90% coverage from the insurance company and is responsible for covering the remainder through coinsurance. However, when a waiver of coinsurance clause is included, this responsibility is removed, ensuring full coverage for the total loss.

Insuranceopedia Explains Waiver Of Coinsurance Clause

Policyholders often need to pay a higher premium to include a waiver of coinsurance clause in a property insurance policy. This is because the clause shifts more financial responsibility to the insurance company. Given that properties are frequently valued at substantial amounts—ranging from hundreds of thousands to millions of dollars—a waiver of coinsurance clause can be crucial. It ensures full coverage and maximizes payouts in the event of a total loss, making it highly relevant for high-value properties.