John Dresser, who owns a small manufacturing concern, has just signed a commercial property policy with a clause requiring Dresser to maintain insurance equal to 80 percent of the property's value at the time of an actual loss. Dresser has accepted what is known as a ____ clause.
A) coinsurance
B) realty protection
C) realty reserve
D) override protection

Question

Quizplus · Accepted Answer

The clause requiring Dresser to maintain insurance equal to 80 percent of the property's value at the time of an actual loss is known as a coinsurance clause. This is a common provision in commercial property insurance policies that aims to ensure that policyholders adequately insure their property to avoid underinsurance at the time of a loss. If Dresser fails to maintain the required amount of insurance, the coinsurance clause could result in a penalty or reduction in the claim payment.

John Dresser, Who Owns a Small Manufacturing Concern, Has Just