What Is Coinsurance?
A policy provision requiring the insured to maintain insurance equal to a stated percentage of the property value, with the insured bearing a proportional share of losses if underinsured. This encourages adequate coverage levels.
Coinsurance across 4 exams
Coinsurance appears on the following exams. Each defines it in the context candidates are tested on:
- Property & Casualty
- A policy provision requiring the insured to maintain insurance equal to a stated percentage of the property value, with the insured bearing a proportional share of losses if underinsured. This encourages adequate coverage levels.
- Health Insurance
- The percentage of covered medical costs the insured pays after meeting the deductible, while the insurer covers the remaining percentage. For example, 80/20 coinsurance means the insurer pays 80% and the insured pays 20% of eligible expenses.
- Personal Lines
- A clause requiring you to maintain insurance equal to a specified percentage of the property's replacement value; if underinsured, the insurer pays a reduced claim amount proportional to your share of the loss. This directly impacts claim recovery and is heavily tested because it penalizes underinsurance.
- Health-Only Insurance
- A cost-sharing arrangement in which the insured and insurer split covered expenses by a set percentage (for example, 80/20) after the deductible is met. The insured's share typically continues until an out-of-pocket maximum is reached.