We are pleased to share with you our newest edition of Insights for Your Industry™, "Coinsurance — What Is It and Why Is It Important?." While specifically addressed to hoteliers, this informational piece discusses what happens when a hotel, or any building owner, for that matter, fails to carry an amount of insurance that is equal to a required percentage of the value of the building.
It is well established that most building property losses are partial in that they do not result in the total destruction of the structure involved. For insureds that recognize this, there may be a tendency to play the odds and limit the amount of insurance purchased. The coinsurance provision in property insurance policies is designed to discourage this thinking. The objective of coinsurance is to reward those who insure at close to full value and penalize those who do not. Hotel management can benefit from regularly discussing their insurance program with their agent or broker, particularly focusing on whether they carry sufficient insurance so as to eliminate a coinsurance penalty in the event of loss.
Offered in electronic format, our complete library of Insights for Your Industry™ is available for free download on our website.