Question

True or False? An insured with blanket insurance must insure to 90 percent of value to avoid a coinsurance penalty but does not receive the 5 percent discount that applies to specific insurance with a 90 percent coinsurance requirement.

Answer 1

The notion that blankets insurance requires 90 percent of value coverage to avoid a coinsurance penalty but does not offer the 5 percent discount is false. Coinsurance clauses and discounts can vary between policies.

Step-by-step explanation:

The statement that an insured with blanket insurance must insure to 90 percent of value to avoid a coinsurance penalty but does not receive a 5 percent discount that applies to specific insurance with a 90 percent coinsurance requirement is False. Coinsurance is a policy provision where the policyholder and the insurance company share the covered losses at a specified percentage. It is designed to prevent underinsurance and encourage policyholders to insure their property or assets to a value closer to their full value.

Blanket insurance covers all of a policyholder's property rather than specific items, while specific insurance relates to designated items or categories. The requirement to insure to a certain percentage, like 90 percent, to avoid penalties is part of the coinsurance clause, which might vary between blanket and specific insurance policies. However, details like a 5 percent discount for meeting coinsurance requirements are not standard across all policies and must be verified with the individual insurance contract.