What does co-insurance require from the insured individual?

Co-insurance is a provision in an insurance policy that requires the insured individual to pay a fixed percentage of the losses after a deductible has been met. This means that once the deductible is satisfied, the insurance policy will cover the majority of the remaining loss, but the insured must contribute a certain percentage toward that remaining amount.

For example, if an individual has a policy with an 80/20 co-insurance clause, and after the deductible has been met, the individual would be responsible for paying 20% of any additional claims. This structure encourages policyholders to share in the cost of claims, which can help to lower overall insurance premiums, as the risk is not transferred entirely to the insurer.

This understanding of co-insurance is critical for individuals managing their health or property insurance, allowing them to navigate potential financial responsibilities effectively.