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July 19, 2017

Last Updated on March 1, 2022 by Jacques Wong, B.Sc.

Co-insurance in the health insurance context is a little different from your regular commercial property insurance.

The co-insurance requirement for commercial property insurance is a requirement to insure a large enough portion of the value of the property. For example, if your property is worth $1,000,000 and you have an 80% co-insurance requirement, then you are required to pick a limit of insurance of at least $800,000. If you don’t and a loss occurs, you would be penalized for not meeting the co-insurance requirement.

With health insurance, the definition of co-insurance is a bit more literal. It just means the percentage of covered healthcare services you are required to pay out of pocket on top of the deductible you already pay. For example, let’s say you have a claim valued at $11,000 with a $1,000 deductible and a 30% co-insurance clause. In this case, you would pay out of pocket the $1,000 deductible plus 30% of the remaining $10,000, equaling $4,000 in total.

Of course, this is subject to your out of pocket maximum. If the amount calculated above is greater than your out of pocket maximum, you would only be required to pay the maximum.

 

This article was originally written for Insuranceopedia

Jacques Wong is the CEO and Director of Education at PNC Learning. An award-winning licensed insurance broker with over 15 years of experience in both education and the insurance industry, Jacques is recognized for his expertise and effective communication strategies. He achieved the highest provincial scores on his CAIB* 3 and CAIB* 4 exams and contributes to leading insurance publications. Jacques is dedicated to making insurance knowledge accessible for everyone through his unique approach and online content.

Jacques Wong

 Jacques wong

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