What will happen to Jane's claim if she has a Business Owners Policy with 60% coinsurance after a fire damages her store?

In this scenario, Jane's Business Owners Policy includes a coinsurance requirement of 60%. Coinsurance is a provision that requires the insured to carry a certain amount of insurance relative to the total value of the property being covered. If the insured fails to meet this requirement at the time of loss, the insurer will apply a penalty to the claim payout.

For Jane, if the insured value of her store is less than 60% of its actual value at the time of the fire, she will incur a coinsurance penalty. This means that the amount she is eligible to receive from her claim will be reduced. The insurer will calculate the appropriate payout based on the ratio of the insurance coverage she maintained compared to the amount required by the coinsurance clause.

This penalty serves as a form of encouragement for policyholders to adequately insure their properties to prevent underinsurance. Therefore, if Jane did not have enough coverage equivalent to the 60% coinsurance requirement, she would be penalized in her claim settlement.

In this context, Jane would not receive the full value of her claim, nor would it be denied entirely, and there is no indication that compensation would be based solely on the actual cash value without considering the coinsurance stipulation. As a result