One of the most important components of determining premium is the proper calculation of the replacement cost valuation (RCV). Unfortunately, many insureds are unaware or surprised to find that the RCV is not the same as the market valuation.
Recently, I had one of my clients call me up to go over his insurance policy. He had finally gotten around to clearing his desk and stumbled across of a renewal letter we sent that listed all of the 'important' parts of his policy - deductibles, limits, miscellaneous forms and such. When he got to the "Co-Insurance" portion of the property policy he stopped, picked up the phone and gave me a call... "What the heck is co-insurance?", he asked.