What is Co-insurance?

On your farm insurance policy Co-Insurance is the agreement to maintain coverage up to a stated percentage of the rebuilding or replacement value of the property that is being insured. The co-insurance percentage is usually 80% or 90%.

This method helps guarantee that the property on your farm insurance policy is covered up to its replacement or rebuilding value – or at least within a close percentage of that value. As this is a part of the overall contract there are consequences to not maintaining coverage to at least the percentage agreed to in the policy.

Should a loss occur, consideration is then given to the amount of insurance coverage on the policy and compares that amount to the replacement or rebuilding value just prior to the loss. If the amount of insurance is within the agreed Co-Insurance percentage requirement of the replacement or rebuilding value, the loss is paid in full, up to the policy limits.

When the amount of insurance on the policy is below the agreed Co-insurance percentage you end up having to pay more out of pocket for the rebuilding cost of the structure per the example below.


Assume the rebuilding or replacement cost of a shed you are insuring is $100,000.00 and the policy contains an 80% Co-Insurance clause; this means you should be carrying at least $80,000.00 coverage on the shed. If you were only carrying $50,000.00 coverage on the shed and had a fire loss of $40,000.00, the Insurance Company would pay the loss based on the following formula:

In this example, you would suffer a $15,000.00 Co-Insurance penalty.

Excalibur will work with you regularly to make sure that this will never happen to you.
We schedule regular reviews on the values of your property to ensure that the coverage you are paying for on the policy is the coverage that you will have if a claim happens.

Get Your Farm Quote
Return to Farm Page