Coinsurance: A Tutorial

A dear friend of mine starts out coinsurance conversations (yes, we actually sit around and talk about this sort of thing, usually with a malted adult beverage) with the following disclaimer/statement/warning: "Coinsurance is evil and must be destroyed."

While I know he is kidding (at least I used to think so), I also am quite aware that there is a significant amount of truth in his statement.

I believe his statement essentially arises from his experience as an insurance professional and teacher who is aware of a lack of understanding about how coinsurance applies, why it exists at all, where it exists in various policies, and how best to manage it.

I’ll try to look at all four of these items in the following discussion—not necessarily in the order presented above—by using an agricultural insurance perspective.