Define 'co-insurance' in insurance policies.

Co-insurance is a provision found in insurance policies that requires the insured to pay a specified percentage of a claim after the deductible has been met. This means that once the insured has paid the initial out-of-pocket amount (the deductible), they share in the remaining costs of a covered loss or expense. For example, if a policy includes an 80/20 co-insurance arrangement, the insurer will pay 80% of the covered claim, while the insured is responsible for the remaining 20%.

This arrangement helps mitigate risks for the insurance company and encourages policyholders to be more conscious about the costs of their claims, as they will have some financial stake in the outcome. It also allows for a more equitable distribution of costs between the insurer and the insured, promoting shared responsibility in managing expenses after a loss occurs.