Coinsurance is the percentage of a covered cost that you pay after meeting your deductible. In health insurance, an 80/20 plan means the insurer pays 80% and you pay 20% until you hit your out-of-pocket maximum. In property insurance, coinsurance clauses require you to insure your property to a minimum percentage of its replacement value.
Health insurance coinsurance is the percentage of an in-network medical bill you pay after your [[deductible]] is satisfied. Under the Affordable Care Act, all marketplace plans must include an annual out-of-pocket maximum (2024: $9,450 individual / $18,900 family); once you reach it, the insurer covers 100% of covered services for the rest of the plan year. Property insurance coinsurance clauses work differently — they are a penalty mechanism, not a cost-sharing percentage. If you insure your building for less than the required percentage of its replacement value (typically 80%), you become a 'co-insurer' for the underinsured portion. A claim will be paid at a reduced amount proportional to how underinsured you are. Example: insuring an $800,000 building at $500,000 (62.5%) against an 80% requirement means the insurer will only pay 78% of any claim (500,000 ÷ 640,000). Understanding which type of coinsurance applies — cost-sharing or penalty clause — requires reading the specific policy form. The NAIC publishes consumer guides on both health and property policy structures.
A copay is a fixed flat amount per service (e.g., $25 per doctor visit). Coinsurance is a percentage split — you pay 20%, the insurer pays 80%. Copays are often charged before meeting the deductible; coinsurance kicks in after.
Insure the building to at least the percentage required by the clause — most commercial policies require 80%, some 90% or 100%. Conduct a replacement-cost appraisal periodically, especially after renovation or inflation in construction costs.