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
Part of the federal Medicare program for additional coverage on a voluntary basis. The Medicare program is divided into two parts: (1) Hospital Insurance provides hospital benefits to ...
Federal law passed in 1920 that allows any seaman incurring bodily injury as the result of the performance of one or more functions of the job to bring a suit for damages against the ...
Investments restricted to short-term Treasury bills (T-bills) and repurchase agreements secured by Treasury bills. These T-bills are secured by the full faith and credit of the Unites ...
Coverage for an insured's liability for damage to another's property from leakage or overflow of water. Some liability policies specifically exclude water damage, including that caused by ...
Undiscounted loss reserves that must be maintained by property and casualty insurance companies in an adequate amount to provide for the payment of the settlement value of the outstanding ...
Insurance company that is licensed by a state to market and service particular lines of insurance in that state. ...
Coverage for liability for damage to property of others from untimely discharge of fire-fighting sprinkler systems. This coverage is available as an endorsement to broad-form comprehensive ...
Same as term Contingency reserve: percentage of total surplus retained, in insurance company operations, that serves as a reserve to cover unexpected losses as well as to cover the ...
Smallest face amount of life insurance that an insurance company will write on any one person. ...
Have a question or comment?
We're here to help.