If you own commercial property in Oklahoma—whether it’s an office building, warehouse, or rental you may have heard the term “co-insurance clause.” It’s one of the most misunderstood parts of a property policy, but also one of the most important.
Co-insurance requires you to insure your property to a certain percentage of its replacement cost commonly 80%, 90%, or 100%. If you don’t, your insurance company may penalize your claim payout, even for partial losses.
A real-world example: Let’s say your building is worth $1,000,000. You only insure it for $500,000 (50% of its value). A fire damages $100,000 of the property. You might think you’d get a $100,000 payout but because you didn’t meet the 80% co-insurance requirement, the insurance company only pays part of the claim based on the percentage you are underinsured, leaving you with a big out-of-pocket bill.
Why it happens:
- Property owners often insure for market value instead of replacement cost.
- Construction costs (especially materials and labor) have risen sharply, meaning many properties are underinsured without owners realizing it.
- Some owners underinsure to save money on premiums, not realizing the risk.
How to protect yourself:
- Get regular property valuations. Costs change—your coverage should too.
- Work with your agent. We can help calculate true replacement cost.
- Don’t skimp to save short term. Saving on premiums today can cost tens of thousands tomorrow.
Co-insurance clauses aren’t meant to trick you—they’re designed to ensure everyone insures their property fairly. But if you underinsure, you’ll pay the price at claim time.
Next Step: Let Oklahoma Insurance Group review your property policy today to make sure you’re covered to value.
Stay Tuned For Other Great Reads In This Month’s Newsletter
- Why Every Small Business Needs General Liability Insurance
- Contractors: How to Avoid Costly Audit Surprises
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