Co-insurer

What Does Co-insurer Mean?

A co-insurer refers to an entity that collaborates with another insurer to provide coverage under the same policy. Both parties share liability for any loss as outlined in the contract. Typically, an insurer will engage a co-insurer when the coverage amount exceeds what they can manage on their own. In such cases, the primary insurer pays out the majority of the claim, while the co-insurer is responsible for covering the remaining loss.

Insuranceopedia Explains Co-insurer

Although similar to reinsurance, in which an insurer transfers a portion of the risk to a reinsurer by paying a premium, co-insurance involves a joint sharing of risk among two or more insurers without any transfer of funds. In some instances, federal or state law may mandate multiple co-insurers for certain risks to ensure that a potentially large claim is adequately covered.

A co-insurer shares in any losses in proportion to the amount of risk they assume. For example, if a co-insurer is involved with a commercial building, they might pay 20 percent of a covered loss, while the primary insurer would cover the remaining 80 percent.