Coinsurance
Your share of a covered loss after the deductible - an 80/20 split is the familiar shape.
Your share of a covered loss after the deductible - an 80/20 split is the familiar shape.
After the deductible is met, the insurer does not pay everything: it pays its percentage and you pay the rest. An 80/20 split on a $5,000 repair with a $1,000 deductible leaves you with $1,000 plus 20% of the remaining $4,000 - $1,800 total. Health plans use the same term with an out-of-pocket maximum capping your annual exposure; property policies use a coinsurance clause that is easy to trip: underinsure a building relative to its replacement cost and the insurer pays only a proportional share of every claim.
Reading the numbers in order settles most confusion: deductible first, then coinsurance percentage, then any annual cap. The premium levers sit between them - a plan with 90/10 costs more than 80/20, and a lower deductible costs more still. Where plans cap your share (health out-of-pocket max), the tail risk is bounded; where they do not (property replacement-cost clauses), the exposure is yours to prevent by insuring to value.
Worked example
Physical therapy runs $1,200 after a $500 deductible is already met: an 80/20 plan pays $960 and your share is $240. The same visit under 70/30 leaves you $360 - the percentage applied to every claim for the whole year.
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