Updated: 09 June 2023

What Does Co-insurer Mean?

A co-insurer refers to an entity that acts as an insurer with another insurer. In other words, they provide additional coverage to the same policy and are liable for any loss as stipulated in the contract. Typically, an insurer will use a co-insurer when the coverage amount is much too high for them to cover on their own. The former would pay out the majority of the claim, while the latter would pay for the remaining covered loss.

Insuranceopedia Explains Co-insurer

Though similar to reinsurance wherein an insurer transfers a portion of the risk to the reinsurer through the payment of a premium, co-insurance simply involves a joint sharing of the risk between two or more insurers without a transfer of money. In some cases, federal or state law may require multiple co-insurers on certain risks so that a possible large claim may be adequately covered.

A co-insurer would share in any losses in proportion to the amount of risk they assume. For example, a co-insurer of a commercial building might end up paying 20 percent of a covered loss, while the main insurer would cover 80 percent.

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