Underinsured property

Commercial property? Coinsurance is standard in commerical insurance.

One must maintain coverage to match their coinsurance percentage or claim will be penalized. example: if you own a propery that is worth $200,000 and your coinsurance is .8 or 80%, you must carry $160,000 worth of coverage to receive full payout.

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you must carry $160,000 worth of coverage to receive full payout.

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Well you would receive the full $160,000 that was carried. not the $200,000. You avoid the penalty but dont get a free $40,000

Insurance is state specific. But every insurance underwriting company has a cost rater. And possession/use of that rater makes the insurance writer the expert. And the fiduciary obligation of an agent means that they must professionally consult with the insured about appropriate limits.

1) was an insurance quote prepared in writing?

2) did it include an analysis of reconstruction costs?

3) the same questions apply to your insurance application.

If it was disclosed and not accepted, then that is on you the insured.

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it is not the agent's responsibility to determine your proper valuation of coverage

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Correct, but the agent should have explained the coinsurance penalty.

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I always assumed this was only for a major claim, not every minor claim.

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There is no coinsurance penalty in Louisiana for a total loss.

A lot of policies have an automatic inflation guard built in to bump coverage slightly each renewal.

In LA the co-insurance penalty comes into play when you’re below 80% of reconstruction cost. So if you’re insured 90% to RC then you’re only out of pocket the deductible. If you’re insured 70% of RC, then you have a 30% co-insurance penalty plus the deductible

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it is not the agent's responsibility to determine your proper valuation of coverage

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While correct, valuation should be a concern of a commercial agent. Not setting the values is fine but making sure they are at least close enough to cover coinsurance issues.

If the insured doesn't know or understand coinsurance, that is where a good agent can show value or end up with a pissed insured. I'd personally be a little upset if this wasn't explained correctly or at all.