The Co-Insurance Clause only applies to what type of losses?

The Co-Insurance Clause is particularly relevant in the context of property insurance, where it is designed to encourage the insured party to insure their property for an adequate amount, typically a percentage of the property's actual value. When the Co-Insurance Clause is invoked, it reflects the idea that if the property is underinsured and a loss occurs, the insured may not receive the full amount of the loss, particularly if that loss is less than the total value of the property.

This clause specifically applies to partial losses. In the case of a partial loss, the insurance payout is affected by the insured amount relative to the actual value. If the property is underinsured, the insurance payout may be reduced based on the co-insurance calculation, even if the loss is not total. The insured would then be responsible for the percentage difference resulting from the co-insurance percentage requirement.

Total losses, on the other hand, typically do not involve the Co-Insurance Clause as they relate to a complete destruction of the insured property, and the insurer would generally pay out the full insured amount without reduction. Excess losses are not a recognized category in the context of this clause. Therefore, the nature of partial losses aligns with the function of the Co-Insurance Clause and justifies