What does coinsurance require from the insured?

Coinsurance is a key concept in insurance policies that refers to the requirement that the insured pays a certain percentage of losses or expenses. This is typically seen in property insurance and health insurance policies, where the insured party shares the cost of a claim alongside the insurance provider.

In a coinsurance arrangement, if a policy includes a coinsurance clause of, for instance, 80%, this means that the insured is responsible for paying 20% of the total covered losses or expenses after any applicable deductibles have been applied. This structure encourages policyholders to take on an active role in the management of their claims and helps to mitigate moral hazard, where the insured might otherwise take excessive risks because they are not bearing any of the costs.

The other options do not accurately represent the nature of coinsurance. For instance, a specific flat fee for services suggests a copayment system rather than coinsurance. Complete coverage at all times conflicts with the concept of shared responsibility, as does the idea of having no deductible on claims; coinsurance typically applies after any deductions have been accounted for. Thus, the correct answer effectively defines the responsibility of the insured under a coinsurance agreement.