What is the minimum amount of insurance required under a coinsurance clause?

In property insurance, a coinsurance clause is designed to encourage policyholders to carry an appropriate amount of insurance coverage relative to the value of the property. The minimum required amount of insurance specified within a typical coinsurance clause is 80% of the property's value at the time of loss.

This threshold is significant because it establishes a baseline to ensure that the policyholder is covering enough of the property's value to avoid penalties during a claim. If the insured party fails to meet this minimum requirement, the insurer may apply a penalty known as a coinsurance penalty, which can result in a reduced payout on a claim.

While there are variations in coinsurance clauses in different policies, the standard requirement is generally set at 80% for most commercial property insurance policies in Wisconsin, making it crucial for policyholders to be aware of this standard to maintain adequate coverage and avoid financial loss.