Co-insurance

Source: Wikipedia, the free encyclopedia.

In insurance, 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

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

In health insurance

In

out-of-pocket expenses 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.[4]

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.[5]

In title insurance

Owner's title insurance policy forms of the American Land Title Association 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.[6]

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.[7]

In business income interruption insurance, a type of time-element insurance,[8] 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%.[9]

See also

References

  1. ^ "2006 Medical Plan Frequently Asked Questions". UPS.edu. University of Puget Sound. What is the difference between co-payments, coinsurance, and deductibles? (entry). Retrieved 2020-01-29.
  2. ^ "Health Plan Explained".
  3. ^ glossary. coinsurance
  4. ^ What Is Coinsurance? Archived 2009-02-27 at the Wayback Machine. Insurancelane.
  5. ^ "What Are Coinsurance Clauses and Do Courts Enforce Them? | Property Insurance Coverage Law Blog | Merlin Law Group". Property Insurance Coverage Law Blog. 2011-09-29. Retrieved 2020-08-31.
  6. ^ See, for example, Conditions and Stipulations No. 7(b) of the 1992 ALTA Owner's Policy.
  7. ^ StudentCover. What is Coinsurance? Know more about Copayment/Copay.
  8. ^ Miller M, Garko M. (2008). Time Element Coverage.
  9. ^ Taking time out for time-element insurance. American Agent & Broker.

External links

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