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
Endorsement to a property insurance policy providing all risks coverage for insured property. Excluded properties include residences, farms, and manufacturing properties. This endorsement ...
Act that provides new funding for the Bank Insurance Fund and enhances the safety and soundness of the financial system. The FDICIA includes the Foreign Bank Supervision Enhancement Act ...
Coverage of the employer for all employees on a blanket basis, with the maximum limit of coverage applied to any one loss without regard for the number of employees involved. Both ...
Insurance coverage that protects a company's and/or individual's assets against financial loss resulting from acts of confiscation, expropriation, or nationalization by a foreign ...
Annual report to policyholders of certain cash value life insurance products and annuities to inform them of the value of the investment portion of their contracts. Buyers of whole life ...
Contract sold by insurance companies that pays a monthly (quarterly, semiannual, or annual) income benefit for the life of a person (the annuitant). The annuitant can never outlive the ...
Process under which terminally ill people sell their life insurance policy for value thereby excluding the policy from being subject to the transfer for value under the three-year rule. ...
Reduction of private pension benefits to avoid "duplication" of Social Security benefits, according to a formula. Many pension plans "offset," or reduce, monthly pension benefits by a ...
Restriction on the benefit that owners and other highly compensated individuals may receive from a qualified pension or other employee benefits. The U.S. Tax Code requires that benefits ...
Have a question or comment?
We're here to help.