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In insurance, a structure in which the policyholder and the insurer split the responsibility for paying for covered items. Coinsurance is most common with health and real estate insurance. For example, if a policyholder has surgery that is covered under the plan, coinsurance might require the policyholder to pay 20% and the insurer to pay the remaining 80%. This helps the insurer control costs by avoiding flippant claims, but also provides most of the coverage needed for the policyholder.


When your healthcare insurance has a coinsurance provision, you and your insurer divide the responsibility for paying doctor and hospital bills by splitting the costs on a percentage basis.

With an 80/20 coinsurance split, for example, your insurer would pay 80%, or $80 of a covered $100 medical bill, and you would pay 20%, or $20.

Some policies set a cap on your out-of-pocket expenses, so that the insurance company covers 95% to 100% of the cost once you have paid the specified amount.

Coinsurance may also apply when you buy insurance on your home or other real estate. In that case, insurers may require you to insure at least a minimum percentage of your property's value -- usually about 80% -- and may reduce what they will cover if you file a claim but have failed to meet the coinsurance requirement.

Coinsurance also describes a situation in which two insurers split the risk of providing coverage, often in cases when the dollar amount of the potential claims is larger than a single insurer is willing to handle. This type of coinsurance is also called reinsurance.


A method of dividing financial responsibility for a loss between the owner and the insurance company.Coinsurance clauses exist within insurance contracts as a type of penalty for an owner who decides to gamble about the size of any potential loss and insure property for less than the full value in order to keep premiums low.They usually provide that an owner may not collect full policy limits for a loss unless the property has been insured to at least 80 percent of its value.
References in periodicals archive ?
Coinsurance clauses require insureds to insure property for a high percentage (usually 80%) of the replacement cost if they are to recover the full amount of a partial loss--that is, a loss of or damage to part of the property insured.
The coinsurance clause is based on the sum of net income (net profit or loss before income taxes) and all operating expenses, including payroll expenses, that would have been earned by the operations at the insured premises for the twelve months of the current policy term had no loss occurred.
The agreed value coverage option replaces the coinsurance clause with a value agreed upon by the insured and the insurer.
In the event of these partial claims, the insurance company is permitted to enact the coinsurance clause. However, for a variety of reasons, coinsurance penalties are poorly enforced.
She also notes that coinsurance deficiency coverage may be necessary to protect against financial penalties assessed for a company's failure to purchase adequate insurance according to the provisions of a coinsurance clause required in some Countries.
* check to see whether there is a coinsurance clause;
Also, most carriers are now implementing coinsurance clauses that require the insured to share in up to 25 percent of the defense costs, settlements, and judgments.