What does coinsurance require from the insured?

The requirement of coinsurance in property insurance typically stipulates that the insured must carry coverage that is a specified percentage of the property's value to ensure full coverage in the event of a claim. This percentage is often set at 80%, 90%, or even 100%, depending on the policy. If the insured does not maintain this level of coverage and suffers a loss, the payout may be reduced in proportion to the amount of coverage that was lacking compared to the required amount. This is designed to encourage policyholders to insure their properties adequately, ensuring that both the insurer and the insured are protected fairly during loss events.

Maintaining the property in its original condition does not pertain to coinsurance, as coinsurance focuses solely on the amount of coverage carried. Similarly, coinsurance does not require the insured to pay for all damages upfront nor limit coverage strictly to personal belongings, but rather emphasizes the importance of aligning insurance coverage with a percentage of the property's value.