Following is a definition of coinsurance along with examples.  Let me know

if you need further clarification.



In property insurance, the percentage of the market value of a property the

policyholder is required to insure. For example, with a coinsurance clause

of 80%, a $200,000 house must be insured for at least $160,000. Insurance

coverage of less than this results in a reduced reimbursement in the event

of a claim.




Case Study The coinsurance clause included in property insurance policies

can result in an unpleasant surprise for a homeowner who files a

substantial claim. Unlike coinsurance, or copay, in health insurance, in

which the insured and insurer each agree to pay a predetermined portion of

any claim, coinsurance applied to property insurance is the percentage of

value a policyholder is required to insure. For example, a home with a

value of $300,000 and an 80% coinsurance clause must be insured for at

least $240,000. Coverage of less than the required amount will result in

the insurance company paying a reduced amount for a claim, even if the

claim is less than the amount of coverage. Suppose the homeowner in the

above example carries $200,000 of coverage, $40,000 less than required by

the coinsurance clause. A fire causing damage of $150,000 will result in an

insurance reimbursement equal to the proportion of actual coverage compared

to the required coverage times the amount of the claim. In this case,

reimbursement is ( $200,000/$240,000 ) $150,000, or $125,000, less any

deductible. Nearly all property insurance policies contain a coinsurance