In commercial property insurance, what does the term 'coinsurance' refer to?

Coinsurance in commercial property insurance refers to the shared responsibility of loss between the insurer and the insured. This mechanism requires the insured to carry a specific percentage of the total insurable value of the property. Typically expressed as a ratio, for example, 80% or 90%, this requirement means that if the insured does not maintain coverage at or above that percentage of the property's value, they may face a penalty upon claim in the form of a reduced payout.

This is designed to encourage policyholders to insure their property for a sufficient value to cover potential losses, thereby mitigating the risk of underinsurance. If a loss occurs and the insured amounts are below the coinsurance requirement, the insurance payout may be prorated, meaning that the insured may receive less than they anticipated based on the amount of coverage they have.

Conversely, the other choices address different aspects of insurance that do not pertain directly to the concept of coinsurance. For example, insurance covering multiple types of perils or excluding certain types of damages relates to policy scope and coverage limits, rather than the ratio of insured versus actual property value relevant to coinsurance.