How the 90% Rule Works

Aleema owns a thriving dental practice with a replacement cost value of $1,000,000, yet when she purchased her TripleGuardTM insurance policy several years ago, she opted for coverage of up to $500,000.


Unfortunately, a flood causes $250,000 worth of damage to Aleema’s office and equipment.


You might assume since the amount of coverage is higher than the cost of the damage ($500,000 vs. $250,000), that the insurance company would pay $250,000. However, because of the 90% co-insurance rule*, this is not the case.


According to the 90% rule, Aleema should have purchased at least $900,000 coverage.  If the threshold of $900,000 (90% of the $1,000,000) that is the minimum threshold, the $250,000 in damages to the practice would be paid by the insurance company.

Since Aleema did not meet the rule, the insurance company may only pay a portion of the minimum coverage represented by the actual cash value limit of insurance purchased ($500,000/$900,000), which amounts to 55.5% of the $250,000 damages.

Because inflation, renovations or the purchase of new equipment may affect the insured value of your TripleGuard office package, it’s important that you periodically review your policy to ensure the contents limit of your coverage meets the 90% co-insurance rule.


*The 90% Coinsurance Clause of the TripleGuardTM policy applies to all new issue contracts and renewals effective January 1, 2021.


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