A co-insurance clause will cause insurers to proportionately reduce claims payments unless you carry insurance up to a specific amount,such as 80 percent of the replacement value.

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A co-insurance clause typically requires that the policyholder carry insurance up to a certain percentage of the property's value (e.g. 80%) in order to avoid a reduction in claims payments. If the policyholder does not meet this requirement, the insurer may only pay a proportionate amount of the claim, based on the percentage of insurance that was actually carried.

A Co-Insurance Clause Will Cause Insurers to Proportionately Reduce Claims