What involves maintaining insurance equal to a specified percentage of property value?

Co-insurance refers to a provision in an insurance policy that requires the insured to maintain coverage equal to a specified percentage of the property's value, typically set at 80%, 90%, or 100%. This ensures that the insured has a sufficient level of coverage relative to the actual value of the property. If the insured fails to carry the required amount of insurance, they may be penalized in the event of a claim by receiving only a proportionate amount of the loss.

For example, if a property is valued at $1 million and the co-insurance requirement is 80%, the insured must have at least $800,000 in coverage. If the insured only carries $600,000 and suffers a loss, the payout could be reduced according to the under-insured amount, leading to a significant financial implication.

The other terms in the choices serve different functions within insurance policies. A deductible clause refers to the amount that the policyholder must pay out-of-pocket before the insurance coverage kicks in. An aggregate limit caps the total amount that an insurer will pay for multiple claims during a policy period. Premium adjustment relates to changes in the insurance premium based on various factors, such as claims history or changes in risk profile, rather than directly addressing coverage amounts