What is the waiver of the co-insurance clause?
A coinsurance clause waiver is a provision in an insurance contract that states that the insurer will not be required to pay coinsurance, or a percentage of the total claim, to the policyholder under certain conditions.
These clauses are most commonly found in property insurance, but may also apply to health insurance and, in fairly rare cases, other types of insurance.
- Exemption of coinsurance clause refers to language in an insurance policy that states the conditions under which policyholders do not have to pay a portion of a claim.
- These clauses may apply to property insurance, health insurance, or other types of insurance.
- Policies with a sub-insurance clause have higher insurance premiums.
How does the waiver of the co-insurance clause work?
With property insurance an individual or business may only receive 80% coverage, which means they must pay the remaining 20% in coinsurance if something happens to their property and they are unable to make a valid claim for compensation. are eligible for. Exemption of coinsurance clause waives this requirement for the policyholder to share the burden and pay certain expenses incurred out of his own pocket.
Generally, insurance companies waive coinsurance for small claims only. That said, in some cases, policies may also include a waiver of coinsurance in the event of a total loss.
Specific language Insurance companies use the waiver of the cuminsurance clause in writing, although they are all similar in principle. Typically, consumers can expect to pay higher insurance premiums for policies with the coinsurance clause exemption, as it puts more liability on the insurance company.
Insurance companies usually only waive co-insurance in case of fairly small claims.
Example of exemption of cuminsurance clause
The waiver of coinsurance clause is especially valuable for the policyholder in the event of a total loss. Assume that a coinsurance clause requires the policyholder to insure at least 80% of the actual value of the property. Thus, if a building is worth $200,000, the property owner must purchase insurance for at least $160,000.
In the event of a total loss, the policy will pay $160,000 and the landlord will be responsible for the remaining $40,000. This will change, of course, if the policy includes a waiver of the coinsurance clause, in which case the insurance company will raise the bill for the full $200,000.
As mentioned earlier, sometimes a waiver of the co-insurance clause can be applied to other types of insurance products, including health insurance as well as on occasion.
Some health insurance policies are 80/20 plans, meaning the insured is responsible for 20% of the medical costs, while the insurance company is responsible for the remaining 80%—provided the customer has paid the deductible.
In the rare scenario when the coinsurance clause waiver is in force, it will eliminate the 20% payment required by the insured under specific circumstances. In other words, if a patient requires surgery for $80,000, a coinsurance insurance waiver covering that procedure would save the patient from spending $16,000 on coinsurance.
As is the case with property insurance, however, co-insurance exemptions in health care often cover very small amounts. They usually come into play when patients pay in advance for specific, relatively inexpensive services at the time of their delivery.