A type of insurance in which the insured and the insurer share the risk of a loss due to fire is:
A) coinsurance.
B) non-forfeiture insurance.
C) no-fault insurance.
D) reinsurance.

Question

Quizplus · Accepted Answer

Coinsurance is a type of insurance in which both the insured and the insurer agree to share the risk of a loss. In a fire insurance policy, the coinsurance clause requires the insured to carry insurance equal to a specified percentage of the value of the property. If a loss occurs, the insurer will pay a proportionate share of the loss based on the percentage of coverage carried by the insured. The purpose of coinsurance is to encourage the insured to carry adequate insurance and to avoid underinsuring the property.

A Type of Insurance in Which the Insured and the Insurer