A property insurance provision that penalizes the insured’s loss recovery if the limit of insurance purchased by the insured is not equal to or greater than a specified percentage (commonly 80 percent) of the value of the insured property. The amount of the loss that is not payable to the insured as a result of failure to comply with the coinsurance provision is commonly referred to as a coinsurance penalty. In commercial property insurance policies, coinsurance can sometimes be avoided with an agreed value provision.
In health insurance and some casualty lines, the percentage share of losses that an insured retains, in the form of a deductible.
