What is typically required of the insured under the co-insurance principle for property insurance?

The co-insurance principle in property insurance requires the insured to maintain a minimum level of insurance coverage that is commensurate with the value of the property. Typically, this is expressed as a percentage of the property's total value. The purpose of this requirement is to encourage policyholders to insure their property for a value that reflects its actual worth.

If the insurance coverage is below the required level, it can result in reduced compensation in the event of a claim. Therefore, maintaining coverage that meets or exceeds the co-insurance requirement ensures that the insured receives the appropriate payout in the event of a loss, promoting a fair risk-sharing arrangement between the insurer and the insured.

The other options do not align with the co-insurance principle. For instance, a higher deductible does not relate directly to the principle, as it is more about the insured’s out-of-pocket expense during a claim rather than their coverage amount. Increasing property value regularly does not affect the co-insurance calculation unless the insurance value is adjusted accordingly. Paying a flat fee for each claim relates to a claims process rather than the underlying insurance coverage and risk management aspect emphasized by co-insurance.