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Waiver Of Coinsurance Clause

What is 'Waiver Of Coinsurance Clause '

Language in an insurance policy that says the insurance company will not require application of the part of the policy that divides responsibility for an insured loss between the insurance company and the policyholder. The coinsurance clause is usually only waived for small losses, such as losses under $10,000. Coinsurance helps to guard against the moral hazard that the policyholder will not purchase sufficient insurance to cover a total loss in order to save money on insurance premiums.

Explaining 'Waiver Of Coinsurance Clause '

A coinsurance clause requires the policyholder to insure a certain minimum percentage of the property's actual value, such as 80%. Thus, if a building was worth $200,000, the property owner would have to purchase $160,000 of insurance on it. In the event of a total loss, the policy would pay $160,000 and the building owner would be responsible for the remaining $40,000. If, however, the property were really worth $300,000, the building should have been insured for at least 80% or $240,000. Since the owner is only insured for $160,000 when he should be insured for $240,000, he is underinsured and would face a penalty in the event of a loss, unless he has a waiver of coinsurance clause.


Further Reading


Everyone Pays the Price When Healthcare Providers Waive Patients' Co-Insurance Obligations
heinonline.org [PDF]
… by merely waiv- ing patient out-of-pocket costs and increasing their charges to off-set the amounts waived … where the co-payment may be a minimal amount, it is well-established that waiver of co … Everyone Pays the Price When Healthcare Providers Waive Patients' Co-Insurance …

Using project finance to fund infrastructure investmentsUsing project finance to fund infrastructure investments
onlinelibrary.wiley.com [PDF]
… by merely waiv- ing patient out-of-pocket costs and increasing their charges to off-set the amounts waived … where the co-payment may be a minimal amount, it is well-established that waiver of co … Everyone Pays the Price When Healthcare Providers Waive Patients' Co-Insurance …

The ACA's 2017 State Innovation Waiver: Is ERISA a Roadblock to Meaningful Healthcare ReformThe ACA's 2017 State Innovation Waiver: Is ERISA a Roadblock to Meaningful Healthcare Reform
heinonline.org [PDF]
… by merely waiv- ing patient out-of-pocket costs and increasing their charges to off-set the amounts waived … where the co-payment may be a minimal amount, it is well-established that waiver of co … Everyone Pays the Price When Healthcare Providers Waive Patients' Co-Insurance …

The Application of Article 101 of the Treaty of Lisbon to forms of horizontal collaboration in the Financial Services SectorThe Application of Article 101 of the Treaty of Lisbon to forms of horizontal collaboration in the Financial Services Sector
qmro.qmul.ac.uk [PDF]
… by merely waiv- ing patient out-of-pocket costs and increasing their charges to off-set the amounts waived … where the co-payment may be a minimal amount, it is well-established that waiver of co … Everyone Pays the Price When Healthcare Providers Waive Patients' Co-Insurance …

Risk transfer via energy-savings insuranceRisk transfer via energy-savings insurance
www.sciencedirect.com [PDF]
… by merely waiv- ing patient out-of-pocket costs and increasing their charges to off-set the amounts waived … where the co-payment may be a minimal amount, it is well-established that waiver of co … Everyone Pays the Price When Healthcare Providers Waive Patients' Co-Insurance …

Invisible women: Why an exemption for hobby lobby would violate the establishment causeInvisible women: Why an exemption for hobby lobby would violate the establishment cause
heinonline.org [PDF]
… by merely waiv- ing patient out-of-pocket costs and increasing their charges to off-set the amounts waived … where the co-payment may be a minimal amount, it is well-established that waiver of co … Everyone Pays the Price When Healthcare Providers Waive Patients' Co-Insurance …



Q&A About Waiver Of Coinsurance Clause


Why would an insurance company waive its right to collect from the insured in cases where it was not at fault?

Insurance companies may waive their right to collect from the insured because they want to keep their customers happy.

What is a coinsurance clause?

A coinsurance clause requires the policyholder to insure a certain minimum percentage of the property's actual value, such as 80%.

What are some examples of waiver of coinsurance clauses?

Some examples include small losses under $1,000 and large losses over $5,000.

How does a coinsurance clause help guard against moral hazard?

It helps guard against moral hazard by requiring the policyholder to pay for part of any loss.

What does "the property owner would have to purchase 16, of insurance on it" mean?

The building owner would have to purchase 16% or $16,000 worth of insurance on his building. If he did not buy enough insurance and his building were destroyed in a fire, he would be responsible for paying the remaining cost ($3,, - $16,, = -$4,,). His insurer could sue him if he did not have sufficient coverage. This is called "coinsurance." In this example, since there is no waiver of coinsurance language in this contract (see below), then there will be no penalty for being underinsured unless you are caught lying about how much your house was worth when you bought your policy (which is fraud). If there were a waiver of coinsurance clause in this contract then there would be no penalty for being underinsured even if you were caught lying about how much your house was worth when you bought your policy (which is fraud) because that clause says that they won't make you pay anything extra if they don't charge enough money up front. You can

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