The insured under a property insurance policy must carry insurance equal to a specified percentage of the property's value to qualify for which type of coverage?

To qualify for coverage under a coinsurance clause, the insured is required to carry insurance that meets a specified percentage of the property's value. This clause is designed to encourage policyholders to insure their property to its full value. If the property is underinsured, the insured may face a penalty at the time of a claim, which would reduce the amount of the claim payout in proportion to the amount of insurance carried versus the actual value of the property.

For example, if a property is valued at $100,000 and the coinsurance requirement is set at 80%, the policyholder would need to carry at least $80,000 in insurance to meet the coinsurance requirement. If the insured only carries $60,000, the insurer would apply a penalty, leading to a reduced payout in the event of a loss.

This mechanism aims to ensure that the insured has a vested interest in insuring their property adequately, thus preventing underinsurance and reducing the risk for the insurer.