Class Description
Coinsurance provisions found in property policies exist primarily to assure that the insurance carrier receives adequate premium for the risk insured. Without a coinsurance condition, and its applicable penalties, insureds might be willing to purchase an amount of coverage somewhat less than the value of the subject property because of the statistically low probability of a total loss. The purchase of lower limits lowers the collectable premium which ultimately necessitates higher rates.
But the application of coinsurance is confusing to clients and can be confusing to many agents.
Students taking this course will learn:
• How the concepts of Maximum Possible Loss (MPL) and Probable Maximum Loss (PML) relate to coinsurance;
• The correct way to develop the values used in the coinsurance formula;
• How to correctly apply the coinsurance formula; and
• The purpose behind coinsurance.