Coinsurance

Coinsurance

Definition

Coinsurance refers to an important aspect of an insurance policy. It represents the percentage of costs that the policyholder must pay after the deductible has been met. In other words, coinsurance splits the cost of coverage between you and your insurer. This term is commonly found in health, property, and homeowners insurance policies and ensures that both the insurer and the insured share the financial responsibility for covered losses.

How It Works

When a claim is filed, coinsurance determines how much of the covered expense each party is responsible for. For example, in a typical 80/20 coinsurance clause, the insurer covers 80% of the approved costs, while the policyholder pays the remaining 20%. In property insurance, coinsurance can apply to the insured value of a building, requiring the policyholder to maintain a specific percentage of coverage relative to the property's value. Failing to do so can result in penalties or reduced compensation during a claim.

Why Irmo, SC Residents Should Know This

Though applicable everywhere, understanding this term helps residents of Irmo plan for uncertainties, especially during storm season. With Irmo’s proximity to severe weather risks like heavy rainfall, high winds, and occasional flooding, being aware of how coinsurance works ensures homeowners and business owners maintain adequate coverage. Properly insuring your property helps prevent financial shortfalls if a major weather event causes damage or loss.

What This Means for Your Coverage

Knowing how coinsurance applies to your insurance policies can help you make informed decisions about your financial protection. For example, if you experience a covered loss, understanding your coinsurance clause can make filing a claim easier and help you anticipate out-of-pocket costs. Policies such as Homeowners Insurance, Flood Insurance, and General Liability Insurance may all include coinsurance provisions depending on your selected coverage type. Reviewing these details regularly ensures that your coverage adequately matches your property or business value and avoids penalties associated with underinsurance.

Expert Tip

The insurance professionals at Edward Lehmann Agency recommend that policyholders in Irmo, SC review their current coverage annually to make sure their coinsurance clauses are in line with property valuations. Regular updates and policy reviews can make a significant difference when a claim arises, ensuring you receive the full benefits of your coverage while staying compliant with policy requirements.