What does co-insurance require from the insured individual?

Co-insurance is a provision in an insurance policy that requires the insured individual to pay a certain percentage of the covered expenses after the deductible has been met. In basic terms, once the deductible—the initial out-of-pocket amount that the insured must pay for their healthcare or any other covered losses—is satisfied, the co-insurance clause kicks in. The insured is then responsible for paying a specified percentage of the remaining costs while the insurance company covers the other portion.

This arrangement effectively shares the risk and costs between the insured and the insurer, encouraging the insured to be mindful about the costs of healthcare services or losses. For example, if a policy includes a co-insurance rate of 20%, this means that after the deductible is paid, the insured would pay 20% of the eligible claims while the insurance company pays the remaining 80%.

Understanding this aspect of co-insurance is vital because it highlights the importance of being aware of both the deductible and co-insurance rates in any insurance policy.