David,

There are three steps to working a coinsurance problem and they must be done in this order:

1. Multiply the value of the property X the coinsurance percent ($100,000 X 80% = 80,000)

2. Divide the limit of insurance by the answer from step #1 ($60,000/$80,000 = .75)

3. Multiply the answer from step #2 by the amount of the loss ($40,000 X .75 = $30,000)

Please let me know if you have other questions.

Jan