When a loss equals or exceeds the amount of insurance required by the applicable percentage of coinsurance, the coinsurance penalty is not part of the calculation because the limit is the amount of coverage.

Question

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When a loss equals or exceeds the amount of insurance required by the applicable percentage of coinsurance, the policyholder has met the coinsurance requirement, thus avoiding the coinsurance penalty, and the insurer pays up to the limit of coverage.

When a Loss Equals or Exceeds the Amount of Insurance