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
Dishonest statement to induce an insurance company to write coverage on an applicant. If the company knew the truth, it would not accept the applicant. Fraudulent misrepresentation gives a ...
Section describing coverages under a policy. Elsewhere in the policy other sections may restrict or exclude coverages. ...
Means of distribution that uses general agents rather than branch offices to sell life and health insurance. ...
Contract that gives the insurance company the right, not the obligation, to buy a stipulated stock or bond at a specified price (strike price) at or before the date of expiration of the ...
Coverage for routine personal legal expenses, including probate, criminal defense, and divorce. ...
Use of a home, and the land and buildings surrounding that home, free from the claim of creditors. This right gives rise to an insurable interest. ...
Total amount of insurance that an insurer will write on any specific city block. Such a limit will reduce the insurer's exposure to a potential catastrophic occurrence, such as a hurricane, ...
Disability in which a wage earner is forever prevented from working at full physical capability because of injury or illness. ...
Protection required under the Motor Carrier Act of 1935. The policy covers the motor truck carrier if it is legally liable for the damage, destruction, or other loss of the customer's ...
Have a question or comment?
We're here to help.