What is the consequence if Kerry's homeowners policy does not meet the required coinsurance percentage?

The consequence of Kerry's homeowners policy not meeting the required coinsurance percentage is that he faces a coinsurance penalty. Coinsurance is a provision in property insurance that requires the policyholder to insure their property to a specified percentage of its value, commonly 80%, 90%, or 100%. If the insured value is less than the required coinsurance percentage, the insured may face a penalty when making a claim.

This penalty typically means that, in the event of a loss, the insurance company will only reimburse a portion of the claim based on the ratio of the amount of insurance carried to the amount required. For example, if he needed $100,000 coverage and only maintained $60,000, he would only collect a percentage of the damages, reflecting how underinsured he is relative to the requirement. This discourages underinsurance and ensures that property owners maintain adequate coverage to protect against losses.

Other options, such as being fully covered for damages or receiving a refund, imply that there are no penalties or repercussions for holding insufficient coverage, which contradicts the principles behind coinsurance requirements. Cancellation of the policy would typically be a separate issue related to non-payment or other policy violations, not directly associated with coinsurance penalties.