Coverage Terms
Coinsurance
A provision in an insurance policy requiring the insured to share in a percentage of covered losses beyond the deductible. In legal malpractice policies, coinsurance provisions are sometimes found in modified hammer clauses, where the insured must pay a percentage (often 50%) of costs exceeding a rejected settlement amount. Coinsurance creates a financial incentive for the insured to accept reasonable settlement offers recommended by the carrier.
Related terms
Consent to SettleA policy provision requiring the insurance company to obtain the insured's approval before settling ...Hammer ClauseA policy provision that limits the insurer's financial exposure when the insured refuses to accept a...DeductibleThe amount the insured must pay toward a covered claim before the insurance policy begins to pay. In...