The 100% coinsurance clause
Libby Ulm
January 2023
It's no secret that insurance policies are filled with clauses, provisions, and exclusions, which is why we always recommend reading your insurance policy closely and coming to us with any questions. We do our best to highlight what exactly is covered on ourPerformerandVendorwebpages, but if you ever have any doubt about your coverages, just ask!
One clause we wanted to discuss in detail is the 100% coinsurance clause on the Inland Marine (business personal property) rider in the Performer and Vendor insurance policies. Inland Marine is an optional coverage you can add to your liability coverage to insure your business personal property while in storage, in transit, or at a show (think of property such as musical instruments, aerial equipment, costumes, or inventory used for your business). The 100% coinsurance clause means you need to cover 100% of the value of your business personal property for a claim to be fully paid. If you only cover a portion of the value, the claim will not pay the full value of loss.
Example: Your music equipment (such as guitars, amps, microphones, etc.) is worth $30,000, and you decide to purchase SIA's $25,000 Inland Marine coverage thinking that if something happens, you'll at least get $25,000. Unfortunately, this is incorrect due to the 100% coinsurance clause because you actually only have 83% of your equipment covered. The coinsurance clause means you need to insure the whole value (100%) of your business personal property, not just a portion. If you purchase a lower coverage limit, you are accepting responsibility for the difference in coverage, which is where the "co" in coinsurance comes from. In the example above, because only 83% of the items were covered, it could mean you may only receive $20,750 for a payout.
Due to the 100% coinsurance clause, it's extremely important when applying for or renewing your insurance policy that the sum of the value of the items you list for Inland Marine coverage don't exceed your coverage limits. In the scenario above, let's say instead of listing all of your equipment you only list the guitars bringing the total value of items covered to $20,000. With your guitars being covered in whole, should a claim arise, you would be eligible to be fully covered by your Inland Marine policy (after the deductible is paid)!
While there is a 100% coinsurance clause for the Inland Marine coverage at SIA, by making sure the items you have covered are less than or equal to your limits, you can better protect yourself of the risk of only receiving a portion of your payout and covering the difference out of pocket.
