Suppose Lisa and Eric do not purchase an adequate amount of insurance on their home.In the event of a claim,they would pay a portion of it.This is the
A)inflation guard.
B)added liability.
C)replacement cost.
D)coinsurance provision.
E)70 percent rule.

Question

Quizplus · Accepted Answer

The provision mentioned in the scenario where Lisa and Eric have to pay a portion of the claim is known as the coinsurance provision. This provision requires the policyholder to insure their property for a certain percentage of its total value, typically 80% or more, to avoid being partially responsible for the loss. In this case, since the amount of insurance is inadequate, Lisa and Eric will have to pay a portion of the claim as per the coinsurance provision.

Suppose Lisa and Eric Do Not Purchase an Adequate Amount