Property Insurance FundamentalsQuestion 152 of 474
Coinsurance penalties under a homeowners policy apply to:
a.Both partial and total losses equally
b.Partial losses only
c.Total losses only
d.Only losses caused by fire
Explanation
Coinsurance is a check on UNDER-insurance, not a cap on recovery. It applies only to PARTIAL losses. A total loss is paid up to the policy limit regardless of coinsurance, because there is no 'partial recovery' question — the insured has lost everything covered.
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Related questions on this topic
- Which statement BEST distinguishes replacement cost from actual cash value?
- Under most California homeowners policies that provide replacement-cost settlement on the dwelling, the insurer typically pays:
- A dwelling with a replacement cost of $500,000 is insured for $300,000 under a policy with an 80% coinsurance clause. A partial loss of $40,000 occurs (ignore the deductible). How much will the insurer pay?
- A homeowner deliberately sets fire to her insured house to collect insurance. The mortgagee on the policy is named under a STANDARD (Union) mortgagee clause. What is the most likely outcome?
- Under the 'Suit' clause of California's standard form fire policy (§2071), how long does the insured have to bring an action against the insurer on the policy?
- Under the standard HO-3, if the dwelling has been vacant for more than how many consecutive days immediately before the loss, certain perils (including vandalism) may be excluded or reduced?
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