Coinsurance Legal Meaning and Definition

Here is a simplified definition of the legal term Coinsurance.

Coinsurance (noun)

Coinsurance is a provision in an insurance policy that stipulates how the financial burden of a loss, either to a person or property, is shared between the insured and the insurance company. This distribution is based on a pre-agreed percentage.

For instance, if a policy has a coinsurance clause of 20 percent, this means the insured party carries the responsibility of paying 20 percent of the total loss or damage. Conversely, the insurance company will cover the remaining 80 percent. This percentage split can vary based on the policy's specific terms.