52 Questions
What is the purpose of a co-insurance clause in an insurance policy?
To ensure the policyholder pays a percentage of the replacement cost in case of a loss
What happens if a policyholder does not meet the co-insurance requirement in an insurance policy?
The insurer will only pay a proportionate amount of the claim
How is the recovery amount calculated in an insurance policy with a co-insurance clause?
(Damage claim) x (Percent replacement cost covered ÷ Minimum coverage requirement)
What does a co-insurance clause in an insurance policy require the policyholder to pay?
A percentage of the replacement cost of the insured property
What happens if a policyholder does not meet the minimum coverage requirement in a co-insurance clause?
The insurer will only pay a proportionate amount of the claim
In the formula for calculating recovery, what does 'Damage claim' represent?
The amount claimed by the policyholder as damaged property
If a home has a replacement cost of $1,000,000 and is insured for $800,000 (80% coverage), what would be the recovery amount if it is damaged?
$600,000
What does a co-insurance clause in an insurance policy typically require the policyholder to pay?
A certain percentage of the replacement cost of the insured property
In the event that a policyholder does not meet the co-insurance requirement, what will the insurer do?
Pay a proportionate amount of the claim
If a home has a replacement cost of $500,000 and it is insured for $400,000 (80% coverage), what would be the recovery amount if it is damaged?
$360,000
What is the formula used to calculate recovery in an insurance policy with a co-insurance clause?
(Damage claim) x (Percent replacement cost covered ÷ Minimum coverage requirement)
What happens if the owner insures a home for less than the required percentage in a co-insurance clause?
The insurer will only pay a proportionate amount of the claim
What is the purpose of a co-insurance clause in an insurance policy?
To ensure policyholders pay a certain percentage of the replacement cost
In the calculation formula for recovery in an insurance policy with a co-insurance clause, what does 'Percent replacement cost covered' represent?
The percentage of the replacement cost the policyholder is insured for
If a policyholder insures a property for $600,000 which is 75% of the replacement cost, with a co-insurance clause requiring 80% coverage, what would be their recovery amount in case of a loss?
$525,000
What would happen if a policyholder insures their property for 90% of its replacement cost in a co-insurance clause demanding 80% coverage?
The policyholder will receive a higher recovery amount
What does the co-insurance clause stipulate if a policyholder fails to meet the minimum coverage requirement?
The insurer will only pay a proportionate amount of the claim
What does a co-insurance clause in an insurance policy require the policyholder to do?
Pay a certain percentage of the replacement cost of the insured property in case of loss
In an insurance policy with a co-insurance clause, what happens if the policyholder does not meet the minimum coverage requirement?
The insurer will only pay a proportionate amount of the claim
What is the calculation formula for recovery in an insurance policy with a co-insurance clause?
$$ Recovery = (Damage claim) x (Percent replacement cost covered ÷ Minimum coverage requirement) $$
What will happen to the recovery amount if a policyholder insures their property for less than the required percentage in a co-insurance clause?
The recovery amount from the insurer will be reduced proportionately
What does the percentage requirement in a co-insurance clause typically refer to?
The minimum coverage required as a percentage of the replacement cost
What does the co-insurance clause in an insurance policy require the policyholder to do?
Pay a certain percentage of the replacement cost of the insured property in case of a loss
What is the recovery amount formula in an insurance policy with a co-insurance clause?
$750,000 x (67% ÷ 80%)
What will happen if a policyholder insures their property for less than the required percentage in a co-insurance clause?
The insurer will only pay a proportionate amount of the claim
In the calculation formula for recovery, what does 'Damage claim' represent?
The amount paid by the insurer for damages
What does the percentage requirement in a co-insurance clause typically refer to?
Coverage percentage that the policyholder must meet for full reimbursement
What is the purpose of a co-insurance clause in an insurance policy?
To share the risk between the insurer and the policyholder
If a policyholder insures their property for less than the required percentage in a co-insurance clause, what is likely to happen?
The insurer will only pay a proportionate amount of the claim
In the calculation formula for recovery in an insurance policy with a co-insurance clause, what does 'Minimum coverage requirement' represent?
The threshold percentage that must be met to avoid penalties
If a home has a replacement cost of $1,200,000 and it is insured for $900,000 (75% of the replacement cost), what would be the recovery amount in case of damage?
$810,000
What does 'Percent replacement cost covered' represent in the formula for calculating recovery in an insurance policy with a co-insurance clause?
The proportion of replacement cost that should have been insured
What does a co-insurance clause in an insurance policy require the policyholder to do?
Pay a certain percentage of the replacement cost of the insured property in case of a loss
What is typically the percentage requirement in a co-insurance clause in an insurance policy?
80%
In the formula for calculating recovery in an insurance policy with a co-insurance clause, what does 'Minimum coverage requirement' represent?
Percentage of replacement cost required by the insurer to avoid penalty
What happens if a policyholder insures their property for less than the required percentage in a co-insurance clause?
The policyholder will have to pay a penalty and only receive a proportionate amount of the claim
What does 'Percent replacement cost covered' represent in the formula for calculating recovery in an insurance policy with a co-insurance clause?
The percentage of the replacement cost that is actually insured
What is the purpose of a co-insurance clause in an insurance policy?
To ensure that the policyholder pays a certain percentage of the replacement cost
In the recovery calculation formula for an insurance policy with a co-insurance clause, what does 'Damage claim' represent?
The total cost of the loss or damage incurred
What happens if a policyholder insures their property for less than the required percentage in a co-insurance clause?
The recovery amount will be reduced by a penalty
What is 'Recovery' in an insurance context with a co-insurance clause?
The final amount that can be claimed by the policyholder
What does the Percentage Replacement Cost Covered represent in the calculation formula for recovery?
The portion of the replacement cost borne by the insurer
What is the purpose of a co-insurance clause in an insurance policy?
To ensure the policyholder pays the full replacement cost
In the event that a policyholder insures their property for less than the required percentage in a co-insurance clause, what is likely to happen?
Insurer only pays a proportionate amount of the claim
What does 'Percent replacement cost covered' represent in the formula for calculating recovery in an insurance policy with a co-insurance clause?
The percentage of the replacement cost insured by the policyholder
What will happen if a policyholder insures their property for less than the required percentage in a co-insurance clause?
Insurer will only pay a proportionate amount of any claim
How is the recovery amount calculated in an insurance policy with a co-insurance clause?
(Damage claim) x (Percent replacement cost covered)
What is the purpose of a co-insurance clause in an insurance policy?
To ensure policyholders pay a certain percentage of replacement cost
In the formula for calculating recovery in an insurance policy with a co-insurance clause, what does 'Percent replacement cost covered' represent?
The percentage of the insured value compared to the replacement cost
If a home has a replacement cost of $900,000 and it is insured for $700,000 (78% coverage), what would be the recovery amount if it is damaged?
$819,231
What would happen if a policyholder insures their property for 85% of its replacement cost in a co-insurance clause demanding 80% coverage?
Insurer pays less than the full claim
What does 'Damage claim' represent in the formula for calculating recovery in an insurance policy with a co-insurance clause?
The cost to repair the damage
Learn about the co-insurance clause in insurance policies, which mandates the policyholder to pay a certain percentage of the replacement cost in case of loss. This quiz explains the concept and provides a calculation formula with an example.
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