Question

Coinsurance is:

a. A device for limiting the insured's recovery to a fixed percentage of loss.
b. A mechanism with which an insurer can deny an entire loss if the insured does not maintain the proper amount of coverage.
c. A system for encouraging insured to buy insurance in close relation to value by reducing the rate.
d. That part of any loss that must be borne by an insured before the insurance steps in to pay.

Answer 1

Coinsurance is a mechanism in insurance where the policyholder pays a certain percentage of a loss, and the insurance company pays the remaining cost. It encourages policyholders to buy insurance coverage in close relation to the value of the loss.

Step-by-step explanation:

Coinsurance is a mechanism in insurance where the policyholder pays a certain percentage of a loss, and the insurance company pays the remaining cost. It is an arrangement that encourages the policyholder to have insurance coverage in close relation to the value of the loss. The policyholder must bear a part of the loss, known as coinsurance, before the insurance coverage begins to pay.