Coinsurance Clause Law and Legal Definition

Coinsurance clause is a provision in an insurance policy that limits the liability of the insurer. It determines what percentage of the value of the property must be insured in order to be fully reimbursed for a loss. This clause requires a property owner to carry separate insurance up to an amount stated in the policy to qualify for full coverage. The owner of the property damaged should have another policy covering usually at least 80% of the cash value of the property at the time of damage in order to collect the full amount insured.