In the event of a loss, how much will Mac recover under his property policy, considering his coinsurance clause?

To determine how much Mac will recover under his property policy with consideration of the coinsurance clause, it's essential to first understand how the coinsurance clause operates. A coinsurance clause requires the policyholder to insure their property at a certain percentage of its total value to receive full compensation in case of a loss.

If Mac had valued his property at $100,000 and the policy included a coinsurance requirement of, for example, 80%, he would need to have at least $80,000 in coverage to fulfill the coinsurance requirement. If he has met this amount at the time of the loss, he would receive the full amount of his coverage, which is $100,000.

Thus, if Mac’s policy is properly aligned with the coinsurance requirement and he has ensured adequate coverage, he is entitled to recover the full amount of his policy limit, which is $100,000 in the event of a loss. This understanding of the coinsurance clause and fulfilment of its requirements is pivotal in determining the recovery amount.

In situations where policy coverage does not meet the coinsurance agreement, the payout may be reduced based on how underinsured the property is. However, since the correct answer suggests he will recover the full limit, it indicates that