What is coinsurance?

coinsurance is a type of insurance which the insured shared the payment's claim with the insurer. The agreement settle in insurance policy which the insured will pay a certain percentage of the covered cost after the payment of the deductible. Coinsurance could be found in health insurance, property insurance, in title insurance and other insurance. It's commonly used in the U.S insurance market. While in Europe, coinsurance is widely used in European insurance market.

What is deductible?

Deductible is a fix amount you have to pay with your own money before the insurance company pay the claim. Deductible are used to deter huge amount of claims which consumer can be expected to bear the cost reasonably. Health insurance companies often offer insurance plans with high premiums and low deductibles, or insurance plans with low premiums and high deductibles. For example, a company have a premium $1000 a month with $5000 deductible, which means the consumer or insured have to pay $5000 in health treatment cost before the insurance company pays anything. 

Coinsurance in Health Insurance

Coinsurance is sometimes used with copayment in health insurance. The difference is copayment is really fixed while the coinsurance provide a percentage insurer pays after the insurance policy's deductible is exceeded up to the policy's stop loss. The maximum percentage of insured's responsibility is usually under 50%. Once the insured's out-of-pocket expenses equal with the stop loss, the insurer will take 100% responsibility of any additional cost. The percentage can be vary depends on each insurance company. The commonly used percentage are 70-30, 80-20 and 90-10 with stop loss limit ranged between $1000-$3000 after the insurers covers all expenses.

Coinsurance in Property Insurance

Coinsurance can be found in many property insurance policies, such as homeowners, commercial property and so on. Coinsurance in property insurance is a means for insurers to obtain rate and premium equality. Coinsurance in property insurance also could be means as a penalty to the insured by insurance company for under reporting the value of property or business income.