Coinsurance is the insured’s percentage share of responsibility for the expense of a loss. Coinsurance percentage amounts are calculated using the amount of a loss, while the deductible percentage amounts are based on the total amount insured. Coinsurance only applies to Catastrophic coverage.
Coinsurance varies from 10% to 20%, depending on geographical location of your home. The amount will be listed on your quote form.
Let’s say your home is insured for $250,000, with 10% coinsurance, and a 2% deductible.
If the loss = $100,000
First, the Deductible is calculated using the insured amount.
Insured amount, multiplied by the deductible percentage, equals the deductible amount:
$250,000 x 2% = $5,000
Next, the Deductible amount to be paid by the insured is subtracted from the loss amount.
Loss amount, minus deductible amount, equals remaining loss amount:
$100,000 - $5,000 = $95,000
Finally, the coinsurance is calculated using the remaining loss amount.
Remaining loss amount, multiplied by coinsurance percentage, equals coinsurance amount:
$95,000 x 10% = $9,500
The insured’s out of pocket expense would be the deductible amount plus the coinsurance amount.
$5000 + $9,500 = $14,500.