What is defined as a clause that requires the insured to carry insurance equal to a specified percentage of the property value?

Coinsurance is defined as a clause that requires the insured to maintain insurance coverage of a specified percentage of the property's value, usually 80%, 90%, or 100%. The purpose of this clause is to encourage policyholders to insure their property to a value that reflects its actual worth. If the insured fails to meet this requirement, they may face penalties in the event of a claim, potentially reducing the amount that the insurer pays out.

For example, if a property is worth $200,000 and the coinsurance clause requires coverage of at least 80%, the insured must carry at least $160,000 in coverage. When a loss occurs, the insurer will determine the payout based on whether the correct amount of insurance was maintained in relation to the property's value. This mechanism is designed to ensure that policyholders do not underinsure their assets and helps to mitigate the risk for insurers.

The other options represent different concepts in insurance. A deductible clause outlines the portion of a loss that the insured is responsible for paying before the insurer covers the remaining amount. An exclusion clause specifies what is not covered under the policy, and a liability clause refers to coverage that protects against claims of injury or property damage to others. Each of these clauses serves unique