Coinsurance Penalty Notice — Commercial Property

This letter notifies the insured that a coinsurance penalty applies to their commercial property loss, explaining the calculation and its effect on payment.

1. Introduction

Dear {{named_insured}},

We have completed our evaluation of your claim for {{claim_type}} to your commercial property at {{loss_location}}, claim number {{claim_number}}, for the loss occurring on {{date_of_loss}}. This letter explains how the coinsurance provision in your policy affects the amount payable for this loss.

2. Coinsurance Provision

Your policy, number {{policy_number}}, contains a coinsurance clause that requires you to maintain coverage equal to at least {{coinsurance_percentage}}% of the replacement cost value of your insured property. This provision is found at {{coinsurance_policy_section}}.

3. Coinsurance Calculation

Based on our evaluation:

| Item | Amount | |------|--------| | Replacement cost value of insured property | {{replacement_cost_value}} | | Required coverage ({{coinsurance_percentage}}% of RCV) | {{required_coverage}} | | Actual coverage carried | {{actual_coverage}} | | Coinsurance ratio | {{coinsurance_ratio}} | | Total covered loss amount | {{total_loss_amount}} | | Less deductible | {{deductible_amount}} | | Adjusted loss after coinsurance | {{adjusted_loss_amount}} |

Because the amount of insurance carried ({{actual_coverage}}) is less than the required amount ({{required_coverage}}), a coinsurance penalty applies. The carrier will pay only the proportion of the loss equal to the ratio of the insurance carried to the insurance required.

4. Payment

Based on the coinsurance calculation above, the amount payable for this claim is {{payment_amount}}, less the applicable deductible of {{deductible_amount}}.

5. Right to Dispute

If you disagree with the replacement cost valuation used in this calculation, you may provide an independent appraisal from a qualified appraiser. Your policy also contains an appraisal clause at {{appraisal_clause_section}} that either party may invoke if we cannot agree on the value.

If you have any questions about this calculation, please contact me at {{adjuster_phone}}.

Sincerely,

{{adjuster_name}} {{adjuster_title}} {{company_name}}