What is the 'coinsurance clause' in a commercial property policy?

Commercial property coinsurance requires the insured to carry insurance equal to a specified percentage of the property's replacement cost value (RCV). Typical coinsurance requirements: 80%, 90%, or 100% of RCV. At a partial loss, if the insured carried less than required, their recovery is proportionally reduced (see coinsurance formula). Insureds can avoid coinsurance penalties by: (1) insuring to value (carrying at least the required percentage); (2) adding an Agreed Value endorsement (waives coinsurance if the insurer agrees on the property value upfront); (3) choosing a policy without coinsurance (typically higher premium).