insurance Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...

, co-insurance or coinsurance is the splitting or spreading of risk among multiple parties.

In the United States

In the U.S. insurance market, co-insurance is the joint assumption of

risk In simple terms, risk is the possibility of something bad happening. Risk involves uncertainty about the effects/implications of an activity with respect to something that humans value (such as health, well-being, wealth, property or the environm ...

between the

insurer Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...

and the

insured Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...

. In

title insurance Title insurance is a form of indemnity insurance predominantly found in the United States and Canada which insures against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage loans. Unlike ...

, it also means the sharing of risks between two or more title insurance companies.

In health insurance

health insurance Health insurance or medical insurance (also known as medical aid in South Africa) is a type of insurance that covers the whole or a part of the risk of a person incurring medical expenses. As with other types of insurance, risk is shared among m ...

copayment A copayment or copay (called a gap in Australian English) is a fixed amount for a covered service, paid by a patient to the provider of service before receiving the service. It may be defined in an insurance policy and paid by an insured person ea ...

is fixed while co-insurance is the percentage that the insured pays after the

insurance policy In insurance, the insurance policy is a contract (generally a standard form contract) between the insurer and the policyholder, which determines the claims which the insurer is legally required to pay. In exchange for an initial payment, known a ...

deductible In an insurance policy, the deductible (in British English, the excess) is the amount paid out of pocket by the policy holder before an insurance provider will pay any expenses. In general usage, the term ''deductible'' may be used to describe o ...

is exceeded, up to the policy's stop loss. It can be expressed as a pair of percentages with the insurer's portion stated first, or just a single percentage showing what the insured pays. Once the insured's

out-of-pocket expenses An out-of-pocket expense (or out-of-pocket cost, OOP) is the direct payment of money that may or may not be later reimbursed from a third-party source. For example, when operating a vehicle, gasoline, parking fees and tolls are considered out-o ...

equal the stop loss the insurer will assume responsibility for 100% of any additional costs. 70–30, 80–20, and 90–10 insurer-insured co-insurance schemes are common, with stop loss limits of $1,000 to $3,000 after which the insurer covers all expenses.

In property insurance

Co-insurance is a penalty imposed on the insured by the insurance carrier for underinsuring the value of the tangible property. The penalty is based on a percentage stated within the policy and the amount underreported.

In title insurance

Owner's title insurance policy forms of the

American Land Title Association The American Land Title Association (ALTA), founded in 1907, is the national trade association representing more than 6,400 title insurance companies, title and settlement agents, independent abstracters, title searchers and real estate attorneys ...

created between 1987 and late 2006, contain co-insurance clauses. For partial losses, they require the insured carry a percentage of the risk of loss in two circumstances. The first is if the insured did not insure its title for at least 80% of its market value at the time the policy was issued. In that case, the insurer will pay only 80% of the loss. The second is if improvements constructed on the property after the policy is issued increase the property's value by at least 20% above the amount of the policy. In that case, the insurer will pay a percentage of the claim equal to the ratio of 120% of the amount of insurance purchased divided by the sum of the amount of insurance and the cost of the improvements. Co-insurance is also used among U.S. domestic title insurers in a manner similar to that described below for the international insurance market.

In other insurance

In some cases, including employer's liability insurance, co-insurance percent denotes a function analogous to the copay function that it has in health insurance, in which the insured covers a certain percentage of the losses up to a certain level. In business income interruption insurance, a type of time-element insurance, the co-insurance percent indicates how long the coverage will last, and can range from 50% to 125%. The former co-insurance allows for 6 months of coverage, compared to 15 months for 125%.Taking time out for time-element insurance
''American Agent & Broker''.

References

External links

Insurance to Value
from the

Casualty Actuarial Society The Casualty Actuarial Society (CAS) is a professional society of actuaries specializing in property and casualty insurance. The two levels of CAS membership are Associate (ACAS) and Fellow (FCAS). Requirements for these levels of membership inc ...

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