Coinsurance
Definition of "Coinsurance"
In property insurance, when the insurance policy contains this clause, coinsurance defines the amount of each loss that the company pays according to the following relationship:Amount of Insurance Carried x Amount of Loss = Insurance Company PaymentWhere: Amount of Insurance Required = Value of Property Insured Coinsurance
x Clause percentage
Amount of Insurance RequiredAmount Note that the indemnification of the insured for a property loss can never exceed the dollar amount of the actual loss; the dollar limits of the insurance policy; the dollar amount determined by the coinsurance relationship. The lesser of the above three amounts will always apply. In commercial health insurance, when the insured and the insurer share in a specific ratio of the covered medical expenses, coinsurance is the insured's share of covered losses. For example, in some policies the insurer pays 75-80% of the covered medical expenses and the insured pays the remainder. In other policies, after the insured pays a deductible amount, the insurer pays 75-80% of the covered medical expenses above the deductible and the insured pays the remainder until a maximum dollar amount is reached (for example, $5000). The insurer pays 100% of covered medical expenses over this dollar amount up to the limits of the policy.
Popular Insurance Terms
Maximum amount of insurance coverage that an insurance company will underwrite in a particular geographic area. ...
Frequency and severity of accidents resulting from conditions and environment surrounding one's workplace. Occupation is an important underwriting factor when considering an applicant for ...
Coverage that guarantees that the executor or administrator of an estate will conduct his or her duties according to the provisions of the will and the legal requirements of the ...
Ending a pension plan at the election of an employer or sponsor. The employer has the unilateral right to change or terminate a pension plan at any time. However, the termination must meet ...
Company formed and operated without the profit motive as its normal business objective; normally sells and services health insurance policies. ...
Financial instruments whose principal and income are established in advance according to contractual terms set forth in the financial instrument's document. Examples of such investments ...
Cost computation form that assumes retirement and commencement of annuity payments on the first day of the month nearest the birthday when a retiree reaches normal retirement age. Most ...
Dividend paid to policy-holder according to the time period in which the policy was sold and the investment return the insurance company made on that policy during that time period. ...
Attachment to a commercial package policy to cover counterfeit currency, depositor's forgery, employee dishonesty, and the loss of money, money orders, and securities by the insured ...
Have a question or comment?
We're here to help.