Coinsurance Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Coinsurance, written in plain English, along with examples of how it is used.
What is Coinsurance?
It is a clause in an insurance policy in which the insurance company and the insured agree to bear the losses according to a fixed percentage agreed between them for losses to person or property insured.
History and Meaning of Coinsurance
Coinsurance is a term that is commonly used in the insurance industry. It has been in use for many years, and its history can be traced back to the early days of insurance. It is a term used to describe an arrangement between the insurer and the insured in which they agree to share the risk of loss according to a fixed percentage. If a loss occurs, the insured will pay a portion of the loss, while the insurer will cover the remaining portion.
Examples of Coinsurance
A health insurance policy may have a coinsurance clause that requires the insured to pay a percentage of the costs of medical treatment, while the insurer covers the rest.
A property insurance policy may have a coinsurance clause that requires the insured to insure their property for a certain percentage of its value, and if they fail to do so, they will be responsible for a portion of the loss.
A business insurance policy may have a coinsurance clause that requires the insured to maintain a certain level of coverage for their business property and if they fail to do so, they will be responsible for a portion of the loss.
Legal Terms Similar to Coinsurance
There are several legal terms that are similar to coinsurance, including:
Deductible: A deductible is a fixed dollar amount that the insured must pay before the insurance company will cover any losses.
Copay: A copay is a fixed dollar amount that the insured must pay for a specific service, such as a doctor's visit or prescription drug.
Premium: A premium is the amount of money that the insured pays to the insurance company to maintain their policy.