What does coinsurance in health and property insurance refer to?

Coinsurance in health and property insurance refers to the percentage of the covered expenses that the insured must pay after the deductible has been met and before the insurer covers the remaining costs. This concept is particularly important as it encourages insured individuals to share in the cost of their claims, rather than transferring the entire financial burden to the insurance company.

In a typical scenario, if a policy has a coinsurance provision, the insurer may cover 80% of the costs, leaving the insured responsible for the remaining 20%. This provision is often intended to reduce the frequency of small claims and ensure that policyholders remain mindful of their expenses. Essentially, coinsurance is designed to promote cost-sharing and responsible usage of insurance benefits, thereby maintaining the sustainability of the insurance model.