Final answer:
Coinsurance is an insurance coverage option where insured subscribers contribute to a trust fund to pay potential damage awards. The policyholder pays a percentage of the loss, and the insurance company pays the remaining cost.
Step-by-step explanation:
The insurance coverage option described in the question is called coinsurance. Coinsurance is a method of insurance where the insured subscribers contribute to a trust fund. This trust fund is used to pay potential damage awards.
In coinsurance, the insurance policyholder pays a percentage of a loss, and the insurance company pays the remaining cost. It is a way to share the risk between the insured individuals and the insurance company.
For example, if the policyholder has a coinsurance of 80%, and they suffer a loss of $1,000, they would pay $800 (80% of $1,000), and the insurance company would pay the remaining $200.