Coinsurance

# Coinsurance - When an insurance policy indicates a...

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When an insurance policy indicates a coinsurance requirement the formula below is used to help determine the proceeds due from the insurance company. After determining the formula amount, the proceeds due from the insurance company will equal the lower of the Face value of the policy, the Loss, or the Formula amount . When there are multiple policies that cover the same asset(s), the same formula is used if the coinsurance percentages of all policies are the same. Face amount of policy X Loss = Formula Amount Co-insurance percentage x FMV of asset Multiple Insurance Policies with One, or More, Having a Different Coinsurance Percentage: If the coinsurance percentages differ on at least one policy then the formula below should be used. The fraction in the formula is determined by taking as the numerator the face value of the policy, and taking as the denominator** the higher of : the total of all the face values of the
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## This note was uploaded on 04/03/2012 for the course ACCT 272 taught by Professor Mensah during the Fall '08 term at Rutgers.

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