Coinsurance (Property Coverage)
Coinsurance is a penalty imposed on the insured by the insurance carrier for under reporting/declaring/insuring the value of tangible property or business income. The penalty is based on a percentage stated within the policy and the amount under reported.

As an example:
A building actually valued at $1,000,000 has an 80% coinsurance clause but is insured for only $750,000. Since its insured value is less than 80% of its actual value, when it suffers a loss, the insurance payout will be subject to the underreporting penalty. For example: It suffers a $200,000 loss. The insured would recover $750,000 ÷ (.80 × 1,000,000) × 200,000 = $187,500 (less any deductible).
In this example the underreporting penalty would be $12,500.
The most commonly issued coinsurance percentage would be 80% but can be as high as 100%. The latter [100%] would impose the greatest penalty for under reporting. For this reason, it is vital that values of property are accurately reported and updated annually to reflect inflation and other increases in cost.

5 years later, man beats insurer over $40 bill

Court orders Aetna to pay for W.Va. retiree's blood testsThe Associated Pressupdated 11:54 a.m. ET, Wed., Nov. 12, 2008POINT PLEASANT, W.Va. - A $40 medical bill might seem small but a West Virginia man says his five-year battle over paying it was a matter of principle. Sam Juniper says his health benefits weren't supposed to change after he retired in 2000 from M&G Polymers.

But he received a $40 bill in 2002 after the company's new provider, Aetna Insurance, refused to cover the cost of some blood work. He challenged that in Mason County court in 2003 and won every decision all the way to the 4th U.S. Circuit Court of Appeals in Richmond, Va. The appeals court ruled in his favor on Oct. 10.

Lawyer Mark Underwood handled Juniper's case for free and says small bills like this add up over time. Juniper says he is still waiting for his $40 refund check, which he plans to frame and hang on his wall.

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