What is the primary purpose of coinsurance in property insurance?

The primary purpose of coinsurance in property insurance is to align coverage with the property's value, thereby encouraging policyholders to insure their property to a certain percentage of its actual value, typically 80%, 90%, or 100%. This structure serves to ensure that sufficient protection is in place in the event of a loss. When policyholders comply with the coinsurance requirement, they are more likely to receive full compensation for their losses.

Coinsurance functions effectively to avoid underinsurance by incentivizing property owners to adequately cover their assets. If the insured value is lower than the required coinsurance percentage, the payout for a claim may be reduced, which encourages compliance and thus aligns the coverage amounts with potential loss values.

The other options, while relevant to insurance in general, do not capture the core intent of coinsurance. Minimizing policyholder risk is a broader objective of insurance but not specific to coinsurance. Simplifying claims processing does not directly relate to the purpose of coinsurance, and while comprehensive coverage can be a trait of policies, it doesn't reflect the specific functionality of coinsurance itself.