COINSURANCE – INSURANCE TO VALUE REQUIREMENT
In the event of loss during the policy period, we will determine the actual business income exposure from policy year inception to the
date of loss. To this actual amount we will add an appropriately projected amount of income exposure for the remainder of the 12
month policy period, comparable to the sum of Line M. and Line P. of this Business Income Worksheet. This more current annual
amount will be multiplied by the Coinsurance percentage you selected for your policy. If the policy limit you carry is less than this more
current required amount of insurance, your loss payment will be reduced.
Example:
Policy Period = 01/01/20xx to 01/01/20xy
Date of Loss =
08/01/20xx
Policy Limit
= $3,000,000
Coinsurance =
50%
Loss
= $1,000,000
Actual Business Income from
01/01/20xx to 07/31/20xx
=
$5,000,000
Projected Business Income from 08/01/20xx to
01/01/20xy
=
+
$3,000,000
More Current Annual Amount
$8,000,000
of Needed Insurance
=
$8,000,000 x 50% coinsurance
=
$4,000,000
Policy Limit of $3,000,000 < $4,000,000 required,
Therefore, $3,000,000 ÷ $4,000,000
=
.75 factor
.75 x $1,000,000 loss
=
$750,000 payable
Coinsurance Penalty
=
$250,000 of loss not payable
OTHER COVERAGE OPTIONS
These exposures are Not Covered under standard industry Business Income Coverage Forms. Consult with your agent or broker if
you answer "YES" to any of the following.
1.
Dependent Properties - If any of the below types of properties you depend on suffered loss or
damage from a covered cause of loss, would you incur a loss of income or extra expense as a result
of their loss?
YES
NO
a.
Key supplier(s) could not produce goods or services you depend on.
YES
NO
b.
Key customer(s) could not receive your goods or services.
YES
NO
c.
Manufacturer(s) could not provide products for delivery to your customers under contracts of sale.
2.
Ordinance or Law - Would complying with ordinances or laws delay your repair or rebuilding?
YES
NO
3.
Contract Penalties - Do you have any contracts with customers which contain penalty clauses if you
cannot supply them with goods or services?
YES
NO
4.
Loss to Personal Property Away From Your Premises - Would you lose significant income or incur
significant extra expenses if your business personal property or property of others was lost or
YES
NO
damaged while away from your premises?
5.
Leasehold Interest - If you are a tenant do you have a favorable long term lease compared to current
market rental rates?
YES
NO
6.
Royalties - Do you receive royalties on any products or services you developed?
YES
NO
Applicant
Date
CP-4962 (Rev. 5-06)
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