The 80/20 rule in home insurance—often referred to as the coinsurance clause—dictates that homeowners must maintain insurance coverage equal to at least 80 percent of their home's total replacement cost to receive full claim payouts for partial damage. If a policyholder insures their home for less than 80 percent of its true rebuilding value, the insurance company will penalize them during a claim by reducing payouts proportionally, meaning the owner absorbs a larger share of the financial loss out of pocket for property repairs.
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