Definition of "Co-Insurance"

Arrangement by which the insurer and the insured share, in a specific ratio, payment for losses covered by the policy, after the deductible is met.

In medical insurance, the insured person and the insurer sometimes share the cost of services under a policy in a specified ratio, for example 80% by the insurer and 20% by the insured. By this means, the cost of coverage to the insured is reduced.

A reinsurance agreement where the reinsuring company essentially accepts an agreed-upon percentage of the liability of a policy. In return, the reinsurer receives a proportionally equal share of the premium from that policy.