Section VII. Coinsurance
Coinsurance applies only to coverage on the building. The coinsurance penalty is imposed on a loss payment unless the amount of insurance applicable to the damaged building is the lesser of:
  • At least 80 percent of its replacement cost
  • The maximum amount of insurance available for that building under the NFIP

If the actual amount of insurance on the building is less than the required amount in accordance with the terms listed above, then loss payment is determined subject to all other relevant conditions in the policy, including those pertaining to valuation, adjustment, settlement, and payment of loss.

The SFIP will pay the amount determined in Section VII. Coinsurance C.3 or the amount of insurance carried, whichever is less. The amount of insurance carried, if in excess of the applicable maximum amount of insurance available under the NFIP, is reduced accordingly.
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Adjuster Tip: Building coverage purchased under individual Dwelling Forms cannot be added to RCBAP coverage in order to avoid the coinsurance penalty.