Which condition is associated with coinsurance?

Coinsurance is a feature often found in property insurance that encourages policyholders to insure their properties for a certain percentage of their full value. This means that the insured is required to maintain a minimum coverage percentage, commonly 80% or 90% of the property's value, to avoid penalties in the event of a claim.

By requiring the insured to maintain this minimum coverage, coinsurance helps ensure that adequate funds are available to cover the potential losses. If the property is underinsured and a claim is made, the insurer may apply a penalty, resulting in a reduced claim payout based on the percentage of coverage maintained versus the actual value. This serves to motivate the insured to have sufficient coverage rather than allowing them to underinsure their property.

Thus, the correct answer highlights the significant role of coinsurance in property insurance, reinforcing the importance of maintaining enough coverage to align with the property's value to facilitate appropriate claim settlements when needed.