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In the financial sector, co-insurance is a cost-sharing agreement between an insurer and an insured person, where both parties share the covered costs after the deductible is paid. The division of costs is done in terms of a percentage. For instance, an 80/20 coinsurance means the insurer covers 80% of the costs, and the insured person pays the remaining 20% after the deductible has been met.


The phonetics of the keyword “CoInsurance” is: Koh-In-shur-uhns.

Key Takeaways

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  1. CoInsurance is the percentage of covered healthcare costs an individual pays after they have met their deductible. This means that the insurance company covers a set percentage of your healthcare costs, and you cover the rest.
  2. CoInsurance rates are typically represented as a ratio. For instance, a common coinsurance rate is 80/20. In this case, the insurance company would pay 80% of covered costs after the deductible is met, and you would pay the remaining 20%.
  3. Unlike a copayment, which is a fixed amount you pay for a covered healthcare service, coinsurance is a percentage of the cost for the service. The amount you pay for coinsurance can therefore fluctify based on the actual cost of the service.

“`Remember, the amount you pay for coinsurance depends on the terms of your specific insurance plan. Always review the terms of your healthcare policy to understand what costs you are responsible for.


Coinsurance is an essential term in business/finance, particularly in the field of insurance, as it defines the shared risk between the insured individual and the insurance company. After meeting a determined deductible, the policyholder and the insurer share the financial responsibility for covered losses, usually on an 80/20 or 70/30 basis where the insurance company pays the larger percentage. This helps to prevent over-utilization of insurance benefits as the insured individual bears a portion of the cost. Additionally, coinsurance influences the premium rate, with lower coinsurance percentages resulting in higher premium costs. Understanding coinsurance is crucial for individuals and businesses when choosing insurance policies; it enables sound financial planning and risk management.


Co-insurance is a type of insurance policy where the risk is distributed among multiple insurers, or the insured assumes some part of the risk, as a method to minimize the risk for one party. In the context of health insurance, co-insurance specifically refers to the amount that the insured is required to pay out of pocket for medical care after the deductible has been met until reaching the out-of-pocket maximum limit. This strategy is employed to avoid moral hazard or the situation where full insurance coverage may lead to the insured not taking enough care to prevent a loss. From a business perspective, co-insurance is widely used in the health insurance industry for the purpose of sharing the financial risk associated with major claims between the policyholder and insurer. This ensures that costs are spread and insurance companies can continue to afford to offer coverage, even as healthcare costs increase. Additionally, from the individual’s viewpoint, a benefit of co-insurance is that it can make major healthcare treatments, procedures, or medication more affordable after the deductible has been met. It is essential though, for individuals to fully understand how their co-insurance works, what percentage of costs they are liable for, and what the out-of-pocket limit is to be prepared for potential expenses.


1. Health Insurance: In a health insurance policy, coinsurance is the percentage of the cost of a medical service that the policyholder must pay after meeting their deductible. For instance, if an insured person has a surgery that costs $20,000 and they have met their deductible, with 20% coinsurance, they will be responsible for paying $4,000. The insurance company covers the rest.2. Homeowners Insurance: For a homeowner’s insurance policy, coinsurance denotes the requirement that a property owner must insure their home to a certain percentage of its total value, usually 80% or 90%, to receive full reimbursement for a loss. If the home is not insured to this extent, the owner may face a “coinsurance penalty,” receiving only a proportion of the claim amount.3. Commercial Property Insurance: In the context of commercial property insurance, a coinsurance clause can require the policyholder to maintain insurance coverage at a certain minimum level (often 80% or 90% of the actual cash value of the property). If a business owner holds less than the agreed coverage at the time of a loss, the coinsurance penalty will reduce the claim payout in proportion to the deficiency, leaving the policyholder to cover a higher portion of the loss.

Frequently Asked Questions(FAQ)

What is CoInsurance in finance and business?

CoInsurance refers to the shared costs by the insured and the insurer after the deductible is met. It is generally represented as a percentage. For example, an 80/20 coinsurance policy means that the insurer pays 80% of the post-deductible cost while the insured pays the remaining 20%.

How does CoInsurance work?

Once you have met your deductible in a policy period, you will only have to pay the coinsurance amount for any covered services. This is often a percentage of the cost. Once you have reached your out-of-pocket maximum, your insurance will pay for 100% of covered costs.

Is there a difference between a deductible and CoInsurance?

Yes, there’s a difference. A deductible is a set amount you have to pay each year before your insurance starts paying. CoInsurance comes into play after your deductible has been met, and it represents the percentage of costs you and your insurance company will share.

What is the purpose of CoInsurance?

The purpose of coinsurance is to share the risk between the insurance company and the insured. It prevents overuse of coverage and keeps premiums manageable.

Does CoInsurance mean I pay 100% of costs?

No, with CoInsurance, you share the cost with your insurer according to a pre-set percentage. You do not bear the whole cost after the deductible. The percentage you pay is the coinsurance rate, and the amount you pay is capped by your out-of-pocket maximum.

Is it better to have a lower CoInsurance percentage?

Yes, if you have a lower CoInsurance percentage, you’ll have to pay less for your medical services or prescriptions after you have met your deductible, thus reducing your potential out-of-pocket expenses.

What happens if I reach my out-of-pocket maximum?

Once you reach your out-of-pocket maximum, your insurance plan covers 100% of your healthcare costs for covered benefits for the rest of the policy period. Your coinsurance responsibilities are suspended during this time.

Do all insurance plans include CoInsurance?

Not all insurance plans include coinsurance. It depends on the insurance agreement. Some insurance plans may use copayments instead of, or in addition to, coinsurance. Always read the terms and conditions before purchasing a plan.

How is CoInsurance represented in an insurance policy?

CoInsurance is typically represented as a ratio or a percentage. For example, if your policy includes a 20% coinsurance clause, you will pay 20% of the total medical expenses after your deductible while the insurance company will cover the remaining 80%.

: Can a policyholder negotiate their CoInsurance percentage?

No, typically the coinsurance percentage is a fixed part of the insurance agreement and non-negotiable. However, policyholders can vary their percentage by choosing different plans with different levels of coverage.

Related Finance Terms

  • Claim
  • Deductible
  • Out-of-Pocket Maximum
  • Premium
  • Policyholder

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