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The Basics of Property Values and Coinsurance Conditions

VU/ABEN Basics & Beyond webseries—Beyond

Replacement cost ain’t always replacement cost. Yes, I know that is poor English – but the point is, replacement cost isn’t as simple as new stuff for old junk. There are many caveats and limitations to full replacement cost (if there is such a thing). Key concepts that must be understood when property valuation is discussed include: actual cash value (ACV); the broad evidence rule; and indemnification.

But what happens if the property limits are too low? Property policies contain a Coinsurance Condition requiring the insured to carry a certain minimum amount of coverage to enjoy full coverage on partial losses. If the insured does not have the requisite limits, they could be penalized.

In this session we detail:

  • Key property valuation definitions such as actual cash value, replacement cost, market value, the broad evidence rule, and insurable interest;
  • The various “values” assignable to property;
  • Why replacement cost isn’t really replacement cost;
  • The requirements created by the coinsurance condition;
  • Why coinsurance exists;
  • What would happen if coinsurance didn’t exist;
  • The coinsurance calculation; and
  • Truths about coinsurance.

approved for 3 hrs. P&C credit

View calendar for upcoming broadcasts​​


ABEN webcasts and the Big "I" Virtual University have partnered together to create a new series of webcasts to start participants at the basics of insurance and then take them  beyond to advanced knowledge. This course is the fourth in the "Beyond" section of classes.​​