What does the insurer pay if the coinsurance requirement is met?

When the coinsurance requirement is met, the insurer pays the replacement cost of the damaged property. This is significant because coinsurance is a policy provision that encourages the policyholder to insure their property to a certain specified percentage of its value, typically 80%, 90%, or 100%. If the insured property is valued correctly and the coinsurance requirement is fulfilled at the time of loss, the insurer is obligated to cover the full replacement cost of the damaged property without any penalties or reductions that might otherwise apply if the coinsurance condition had not been satisfied.

This ensures that the insured is adequately protected and can reinstate or replace the property to its original condition without facing undue financial loss due to underinsurance. The other choices may imply different loss settlement procedures that do not apply when the coinsurance requirement is fully met, which is why they do not align with the correct application of the coinsurance clause.