Co-insurance Penalty Explained - Know Your Coverage

Co-insurance Penalty Explained – Know Your Photography Coverage

Photographer insurance, also known as camera insurance or insurance for photographers, is essential to protect your business from potential losses. Insurance is designed to provide coverage and peace of mind, whether a complete loss like a fire or a partial loss like theft. The last thing you want to worry about after experiencing a claim is whether you’re adequately covered. Being underinsured can be daunting, as insurance companies often impose a co-insurance clause or penalty in such cases. While co-insurance may seem overwhelming initially, it plays a crucial role in your insurance policy and is worth understanding fully. This article will demystify co-insurance and explain how it impacts your coverage as a photographer.

Understanding Co-insurance

Many policies include a co-insurance clause. This clause requires policyholders (that’s you) to insure your property to at least a specific percentage of the total replacement cost value. If you don’t, then your payout in the event of a claim may be penalized. As a photographer, you should calculate how much; if you put every item of your equipment into a pile, it would cost you to replace all of it. Every policy and insurance company is different; your photography insurance with Harvard Western Insurance requires you to insure your equipment to at least 90% of its replacement value! You may be tempted to insure only the gear you take on location or the most valuable pieces of equipment; however, in the event of a partial loss, you will suffer the co-insurance penalty. You will only receive the amount you are insured for in total loss, as listed on your policy declaration.

Why does Co-Insurance exist?

People tend to assume that if they experience a loss, it won’t be a total loss. So why would they insure the total value of their property? They think if they only insure a portion of the value, they can save some money on their insurance and still be covered if a loss happens. Unfortunately, this is incorrect. This is why the co-insurance clause exists. Insurance aims to protect you from partial and catastrophic total losses. Insurers collect premiums based on the total value of your property being insured so that when total losses happen, the funds are available to pay out.

How does Co-Insurance work?

Suppose you have $30,000 in photography-specific equipment (cameras, lenses, lights, backgrounds, props etc.). Now, your insurance policy is subject to a 90% co-insurance clause. You must ensure the equipment is at least $27,000, but complete replacement is recommended. If, for example, your gear is stolen and you’re insured to the co-insurance requirement, no co-insurance penalty will be applied to the settlement in the event of a partial loss. But let’s say instead of insuring for $30,000, you only insure for $15,000 because you assume you’d never have a loss that exceeds $15,000 in damages. Suppose the policy is subject to a 90% co-insurance clause. In that case, the insurance company will look at what insurance limit you hold on your policy, the equipment’s total replacement value, and whether your policy limit meets the 90% co-insurance limit required.

$30,000 x 90% = $27,000 is the minimum you should have insured the equipment to.

Since you’re underinsured, the insurance company will penalize your pay by applying the co-insurance formula to your loss. This means they take what you DID insure too, divide this by what you SHOULD have insured to, and multiply this factor by your loss.
($15,000 / $27,000) x $15,000 = $8,333 would be the amount you get paid.

In the event of a total loss, the company will pay out to the limit on your Policy declaration. In the above example, that is $15,000. Even though you lost $30,000 worth of possessions, you will only receive $15,000.

The additional premium you could have paid to be fully insured would be less than paying almost $7,000 out of your pocket! It would take over 45 years* to pay that in additional premium. (*Based on the 2023 rate for an additional premium of $15,000 additional equipment limit).

Newly Acquired Equipment Clause

If you purchase new equipment, and the total value of your equipment increases, bringing you under the 90% threshold, you have 30 days with $10,000 of additional coverage. In the first 30 days, you need to notify us of the purchase so we can add the increase to your equipment limit. The additional premium will be prorated for the rest of your insurance term.


Co-insurance is not limited to commercial property policies; it also applies to home insurance. Therefore, it’s crucial to ensure that all insurance categories, including office contents and rented equipment, are adequately covered. It is advisable to discuss with your broker how co-insurance may impact you when filing a claim. Regularly reviewing the insurance limits on your policy will help you avoid falling victim to the co-insurance formula.

If you have any concerns about being underinsured or need camera insurance or photographer insurance, don’t hesitate to contact us today. Our team specializes in providing comprehensive insurance solutions for photographers.

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