What is required to avoid a coinsurance penalty under blanket insurance?

To avoid a coinsurance penalty under a blanket insurance policy, the requirement is to insure to at least 90 percent of the total value of the insured items. Coinsurance is a provision in property insurance policies that mandates the insured to maintain a certain level of coverage relative to the value of the property being insured. If the coverage falls below this required percentage, any loss will be subject to a penalty because the insurer expects the insured to share in the risk.

When a blanket policy is in place, it covers multiple properties or locations under a single limit. The requirement to insure to 90 percent helps ensure that the insured property is sufficiently covered. If the insured value is below this threshold, the insured may face a significant penalty during a claim, receiving only a proportionate amount of the claim based on the actual coverage versus the required coverage.

Insuring to only 80 percent or lower would not meet the minimum threshold necessary to avoid penalties. On the other hand, insuring to 100 percent provides complete coverage but is not a requirement for avoiding a coinsurance penalty under blanket insurance, making the 90 percent threshold the correct choice to meet the policy conditions effectively.