What is Coinsurance?
The percentage of costs you share with your insurance company after meeting your deductible.
Understanding Coinsurance
Coinsurance is most common in health insurance, where you might have an 80/20 split (insurer pays 80%, you pay 20%) after your deductible. In property insurance, coinsurance clauses require you to insure your property to a certain percentage of its value, or face reduced claim payments.
Examples
- With 80/20 coinsurance on a $1,000 medical bill after your deductible, you pay $200 and insurance pays $800.
- A home policy with 80% coinsurance means you must insure the home for at least 80% of its replacement value.
- If you're underinsured relative to the coinsurance requirement, your claim payment will be proportionally reduced.
Common Questions About Coinsurance
What's the difference between coinsurance and copay?
A copay is a fixed dollar amount you pay for a service (like $25 for a doctor visit). Coinsurance is a percentage of the cost you pay after your deductible (like 20% of a hospital bill).
How does the coinsurance penalty work in home insurance?
If your policy has an 80% coinsurance clause and you insure your $300,000 home for only $200,000, you're at 67% instead of 80%. Claims may be reduced proportionally—you'd receive only 67/80 (84%) of your claim amount, minus your deductible.