Coinsurance
Coinsurance is the part of a covered cost that you pay under an insurance policy. In health insurance, it is usually a percentage of the allowed amount after the deductible. In property insurance, a coinsurance clause can reduce a claim when the insured limit is below the required percentage of the property's value.
Also called: coinsurance clause
The same word means two different things depending on the policy in front of you. On a health plan, coinsurance is the percentage of an allowed cost you pay after the deductible. On a property policy, it is a requirement to insure the property for a set percentage of its value, and falling short can shrink a partial-loss payment. The first question on any document is which of the two it is.
How coinsurance works, with a health plan example
HealthCare.gov (opens in a new tab) shows the health version with a $12,000 stay, a $3,000 deductible, 20% coinsurance, and a $6,850 out-of-pocket maximum.
Hover or tap a row to highlight it.
| Step | Amount |
|---|---|
| You pay the deductible first | $3,000 |
| Remaining covered cost ($12,000 minus $3,000) | $9,000 |
| Your coinsurance (20% of $9,000) | $1,800 |
| Insurer pays the other 80% of $9,000 | $7,200 |
| Your total payment ($3,000 plus $1,800) | $4,800 |
If covered in-network spending reaches the $6,850 out-of-pocket maximum, the plan pays 100% of covered benefits for the rest of the plan year, subject to the plan's terms. The percentage applies to the plan's allowed amount, and out-of-network benefits, balance billing, and excluded services can change the result.
Property coinsurance uses a different calculation. The ISO HO 00 03 homeowners form (opens in a new tab) requires insurance of at least 80% of full replacement cost. If the limit is lower, it pays the greater of actual cash value or the share of the loss equal to the policy limit divided by 80% of replacement cost. The 80% describes how much insurance you must carry, not the percentage of each claim the insurer pays.
Common percentages and what they change
Health plans state coinsurance as a percentage of the allowed amount, such as 20%, 30%, or 40%, and your payment rises as the percentage rises. In-network coinsurance is generally lower than out-of-network, according to HealthCare.gov (opens in a new tab).
Marketplace plans fall into metal levels with estimated plan shares of 60% for Bronze, 70% for Silver, 80% for Gold, and 90% for Platinum, per HealthCare.gov (opens in a new tab). Those shares describe a plan's overall covered costs, not each service's coinsurance rate.
Property policies commonly set the requirement at 80%, according to the NAIC glossary (opens in a new tab), and a policy can use another percentage if its wording says so. For condominium buildings under the National Flood Insurance Program, the FEMA claims manual (opens in a new tab) uses 80% of replacement cost or the maximum available under the statute, whichever is less.
Using the wrong value is a common way to come up short. The ISO form refers to full replacement cost, while other policies may use actual cash value, agreed value, or another method. Meeting an 80% requirement does not guarantee payment of every rebuilding cost, because the limit, deductible, and exclusions still apply.
Where you meet the term
In health, Medicare, dental, vision, and prescription-drug coverage, coinsurance usually appears in the Summary of Benefits and Coverage, benefit schedule, explanation of benefits, or renewal materials. In homeowners, renters, condo, commercial property, business-interruption, inland-marine, and some flood policies, it sits in the declarations, the loss-settlement or valuation condition, or an endorsement.
A quote or declarations page may show only the percentage, and the full policy, endorsement, or benefit document holds the calculation. Auto policies more commonly use deductibles and liability limits. Pet policies commonly use deductibles, reimbursement percentages, and annual or per-condition limits, but the contract controls, as our guide to pet insurance explains.
How Connecticut and New York law change it
Connecticut has no single coinsurance rule for every policy, but it shapes three areas. Conn. Gen. Stat. § 38a-307 (opens in a new tab) establishes the Connecticut Standard Fire Insurance Policy, and Conn. Gen. Stat. § 38a-308 (opens in a new tab) requires qualifying fire policies to conform to that form, with stated exceptions. A condominium association must carry property insurance on common elements, generally at not less than 80% of actual cash value after deductibles, under Conn. Gen. Stat. § 47-255 (opens in a new tab). The Connecticut Insurance Department (opens in a new tab) says property coinsurance provisions differ by insurer and can decrease recovery.
New York law mostly changes coinsurance on health plans. Insurance Law § 3241(c) (opens in a new tab) holds insureds harmless for charges above the in-network deductible, copayment, or coinsurance for out-of-network hospital emergency services. Insurance Law § 3242 (opens in a new tab) requires formularies to identify preventive drugs available without deductibles or coinsurance and requires advance notice of coinsurance changes. The New York Department of Financial Services (opens in a new tab) says surprise-bill protections generally limit an insured's responsibility to in-network cost sharing, including in-network coinsurance.
Questions to ask an agent or insurer
- Is this coinsurance for health-care cost sharing or a property insurance-to-value requirement? The two meanings use different calculations.
- What exact amount is the percentage applied to? Health coinsurance generally uses the allowed amount, while property coinsurance may use replacement cost, actual cash value, or another policy-defined value.
- What deductible applies before coinsurance, and what expenses count toward the out-of-pocket maximum? The order of the three sets your cash exposure.
- What property value and percentage must I insure to avoid a coinsurance reduction, and how often is that value updated? Construction costs and property values change, and an inadequate limit can reduce a partial-loss payment.
- Are emergency, out-of-network, excluded, sublimited, or balance-billed charges treated differently? Network status, exclusions, and state surprise-billing protections can change what you owe.
Frequently asked questions
Four questions come up most often with this term.
Is coinsurance the same as a copay?
No. Coinsurance is a percentage of the allowed amount, while a copay is a fixed dollar amount for a covered service, such as $20. Both count as cost sharing, and a deductible is the amount you pay before the plan starts paying.
What is an 80% coinsurance clause in home insurance?
It requires insurance equal to at least 80% of the applicable property value, often replacement cost. If your limit is lower, the policy can reduce a partial-loss payment under its formula. The clause does not mean the insurer pays only 80% of a claim.
Does coinsurance count toward the health out-of-pocket maximum?
Qualifying deductibles, copayments, and coinsurance for covered in-network care generally count, according to HealthCare.gov (opens in a new tab). Premiums, noncovered services, and many balance-billed amounts do not.
Why did the insurer pay less than my property loss?
An inadequate limit under a coinsurance clause is one reason. The deductible, actual-cash-value treatment, policy limits, exclusions, sublimits, or uncovered damage can also lower a payment, and the policy's loss-settlement wording controls.