Which of the following methods requires the insured to insure at least 80% of the value of the covered commercial property?

The correct answer is the coinsurance clause. This provision is commonly included in property insurance policies and requires the insured to carry a minimum amount of insurance—typically set at 80% of the property's value—to avoid penalties in the event of a loss. The purpose of the coinsurance requirement is to encourage policyholders to insure their property for its full value, which helps ensure that losses are more adequately covered.

When a policy contains a coinsurance requirement, if the insured fails to meet the threshold percentage at the time of loss, they may face a penalty that reduces the amount the insurer pays for a claim. This penalty is often calculated based on the ratio of the amount of insurance purchased to the amount that should have been carried (in this case, the 80%).

Understanding the coinsurance clause is crucial for both agents and policyholders, as it influences how much coverage to buy and the implications of underinsuring property. It ensures that the insurer and the insured share the risk appropriately, aligning the coverage with the actual value of the property.