Canadian Accredited Insurance Broker (CAIB) Three Exam 2025 – 400 Free Practice Questions to Pass the Exam

The concept of co-insurance in property insurance primarily involves a policy provision that incentivizes policyholders to insure their property to a certain value to receive full compensation in case of a loss. This means that if the insured property is not covered to at least a specified percentage of its actual cash value, the insured may not be able to recover the full amount of the loss.

In property insurance, co-insurance typically states that if you insure your property for less than the required amount, you may have to bear a portion of the loss yourself. By doing so, insuring to a specific value helps maintain adequate coverage and ensures that the insurer isn't responsible for a disproportionately large payout in case of a claim, which aligns the interests of the policyholder and the insurer.

This provision encourages policyholders to assess and insure their property accurately against its value, ensuring that they are adequately protected and supporting the principle of risk-sharing inherent in insurance contracts. This understanding of co-insurance emphasizes the importance of insuring property to its full value to optimize claims benefits.