Coinsurance
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.
For example:
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. The insured amount multiplied by the deductible percentage, equals the:
Deductible Amount: ($250,000 x 2%) = $5,000
Next, the Deductible amount (from #1 above), which is to be paid by the insured, is subtracted from the loss amount. The loss amount minus deductible amount, equals the:
Remaining loss amount: ($100,000 - $5,000) = $95,000
Finally, the coinsurance is calculated using the remaining loss amount (from #2 above). The 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.