What is the 80% rule?(1 point)

Question

Responses

Insurance companies will require the policy holder to cover 80% of the deductible up front.
Insurance companies will require the policy holder to cover 80% of the deductible up front.

Banks holding mortgages require the policy holder to embed 80% of the premiums into the mortgage.
Banks holding mortgages require the policy holder to embed 80% of the premiums into the mortgage.

Insurance companies require that 20% of the replacement cost of the property be set as the deductible.
Insurance companies require that 20% of the replacement cost of the property be set as the deductible.

Insurance companies will require the policy holder take 80% of the replacement cost of the entire property in coverage, or they will reduce the reimbursements by a proportionate amount

Answer 1

The correct response regarding the 80% rule is:

Insurance companies will require the policy holder take 80% of the replacement cost of the entire property in coverage, or they will reduce the reimbursements by a proportionate amount.

This principle generally means that to receive full compensation for a loss, a property owner must insure their property for at least 80% of its replacement cost. If they do not, any claims made may be subject to a penalty or reduced reimbursement.