CII Certificate in Insurance - Award in General Insurance (non-UK) (W01) Practice Test

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What does 'co-insurance' entail?

A provision requiring full coverage by the insurer

It eliminates the insured's responsibility

A requirement for the insured to share in loss coverage

Co-insurance refers to a provision in insurance policies where the insured is required to share in the loss coverage. This typically means that the insured holds a proportionate share of the risk and is responsible for a percentage of any covered loss. In property insurance, for example, a policy may stipulate that the insured must maintain coverage on their property equal to a certain percentage of its total value. If they fail to do so, they would face a penalty in the event of a claim, meaning they would be responsible for a portion of the loss out of pocket.

This concept of co-insurance serves to encourage policyholders to insure their property adequately and helps to prevent underinsurance, ensuring that both the insurer and insured are sharing the financial risks associated with loss.

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A fixed rate for all types of losses

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