Which of the following statements about co-insurance is true?

The statement about co-insurance that is true is that many homes are under-insured by an average of 35%. This concept is particularly relevant in property insurance, where co-insurance requires that a homeowner insure their property for a certain percentage of its total value, usually around 80% to 90%. If a homeowner fails to meet this requirement and experiences a loss, their claims may be reduced significantly, effectively resulting in being under-insured.

In practice, many homeowners might not realize the full replacement cost of their home or may insure it for a lower amount than necessary, which leads to under-insurance. This average figure of 35% indicates that homeowners may not have adequate financial coverage to rebuild or repair their homes, highlighting the importance of regularly reviewing and adjusting insurance coverage to align with market conditions and the true value of the property. Addressing under-insurance ensures that homeowners can recover financially after a loss, rather than facing a shortfall.

This context further emphasizes the need for homeowners to periodically reassess their property valuations and insurance levels to avoid being under-insured and potentially facing insufficient coverage when it matters most.