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The cost of building repairs or replacement Instead, we will determine the most we will does not include the increased cost pay using the following steps: attributable to enforcement of or (1) Multiply the value of Covered Property compliance with any ordinance or law at the time of loss by the Coinsurance regulating the construction, use or repair of percentage; any property. (2) Divide the Limit of Insurance of the However, the following property will be property by the figure determined in valued at the actual cash value, even when Step (1); attached to the building: (3) Multiply the total amount of loss, before (1) Awnings or floor coverings; the application of any deductible, by the (2) Appliances for refrigerating, ventilating, figure determined in Step (2); and cooking, dishwashing or laundering; or (4) Subtract the deductible from the figure (3) Outdoor equipment or furniture. determined in Step (3). c. "Stock" you have sold but not delivered at We will pay the amount determined in Step the selling price less discounts and (4) or the Limit of Insurance, whichever is expenses you otherwise would have had. less. For the remainder, you will either have to rely on other insurance or absorb the d. Glass at the cost of replacement with loss yourself. safety-glazing material if required by law. Example 1 (Underinsurance) e. Tenants' Improvements and Betterments at: (1) Actual cash value of the lost or When:The value of the property is: $250,000 damaged property if you make repairs The Coinsurance percentage promptly. for it is: 80% (2) A proportion of your original cost if you The Limit of Insurance for it is:$100,000 do not make repairs promptly. We will The Deductible is: $250 determine the proportionate value as The amount of loss is: $40,000 follows: Step (1): (a) Multiply the original cost by the $250,000 x 80% = $200,000 number of days from the loss or (the minimum amount of insurance to damage to the expiration of the meet your Coinsurance requirements) lease; and Step (2):$100,000 ø$200,000 = .50 (b) Divide the amount determined in (a) Step (3):$40,000 x .50 = $20,000 above by the number of days from Step (4): $20,000 – $250 = $19,750 the installation of improvements to the expiration of the lease. We will pay no more than $19,750. The remaining $20,250 is not covered. If your lease contains a renewal option, the expiration of the renewal option Example 2 (Adequate Insurance) period will replace the expiration of the When:The value of the property is: $250,000 lease in this procedure. The Coinsurance percentage (3) Nothing if others pay for repairs or for it is:80% replacement. The Limit of Insurance for it is:$200,000 F. Additional Conditions The Deductible is: $250 The following conditions apply in addition to the The amount of loss is: $40,000 Common Policy Conditions and the Commercial Property Conditions: The minimum amount of insurance to meet your 1. Coinsurance Coinsurance requirement is $200,000 ($250,000 x 80%). Therefore, the Limit of Insurance in this If a Coinsurance percentage is shown in the example is adequate, and no penalty applies. We will Declarations, the following condition applies: pay no more than $39,750 ($40,000 amount of loss a. We will not pay the full amount of any loss if minus the deductible of $250). the value of Covered Property at the time of loss times the Coinsurance percentage shown for it in the Declarations is greater than the Limit of Insurance for the property. CP 00 10 10 12 © Insurance Services Office, Inc.,2011 Page 13of 16