How is "co-insurance" applied in property insurance?

Co-insurance is a critical concept in property insurance that mandates policyholders to insure their property for a specified percentage of its total value, typically around 80%, 90%, or 100%. This requirement helps ensure that the insurance coverage is adequate to cover potential losses. If a policyholder fails to meet this minimum percentage, they may be penalized in the event of a claim, which could result in reduced compensation.

By requiring a certain level of coverage relative to the property's actual value, co-insurance encourages policyholders to maintain sufficient insurance to protect against significant losses. This principle is designed to prevent underinsurance and ensures that insurance remains viable for both the insurer and the insured. Hence, option C accurately reflects the application of co-insurance in property insurance, highlighting the importance of sufficient coverage in minimizing financial losses.