Limit Of Recovery
Definition of "Limit of recovery"
Same as term 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
Legal status giving an insurance company all rights to an insured's property. The abandonment clause is usually found in marine insurance and not in other property insurance policies such ...
Investment risk associated with the psychology of the market in that emotions affect the price of a company's stock that, in most instances, has nothing to do with the current or potential ...
Same as term Maximum Foreseeable Loss: worst case scenario under which an estimate is made of the maximum dollar amount that can be lost if a catastrophe occurs such as a hurricane or ...
Same as term Fortuitous Loss: loss occurring by accident or chance, not by anyone's intention. Insurance policies provide coverage against losses that occur only on a chance basis, where ...
Rating method for commercial fire insurance according to a predetermined schedule. Published by A. F. Dean in 1902, this method was the first comprehensive qualitative analysis procedure to ...
Coverage for an advertiser's negligent acts and/or omissions in advertising (both oral and written) that may result in a civil suit for libel, slander, defamation of character, or copyright ...
Coverage when business records are destroyed by an insured peril and the business cannot collect money owed. The policy covers these uncollectible sums plus the expense of record ...
Fronted program by the insured acquires a licensed insurance company to issue insurance policies. ...
Percentage of total assets set aside by an insurance company to provide for unexpected losses. In general, a minimum of a 5% surplus ratio (5 cents in reserve for each $1 of assets) is ...
Have a question or comment?
We're here to help.