When taking out an insurance policy it doesn’t always have to be an individual that takes on the full responsibility of being the policy holder. In fact several parties can be listed as holders and the risk is spread evenly throughout the group. An example of this would be a couple taking on a joint life insurance policy, where they are both covered and equally responsible for premiums. This is sometimes called joint insurance. More commonly though, Co-Insurance refers to an insurance policy where the policy holder has a requirement to pay a percentage of the insurance payout out of their own pocket, thus often lowering premiums.
For example after a $5,000 car accident (assuming the deductible had been met), the policy holder must pay 5% of their own cover, whilst the insurance company would pay the rest. This would result in a cost of $250 to the policy holder and a payout of $4,750 from the insurance company. If the policy holder refuses to pay, then the insurance company is also allowed to withhold their payment as per the terms in the agreement. This form of insurance offers lower premiums to the holder (theoretically making it more affordable), and also protects the insurance company from making large payouts. The specific terms and formula used during co-insurance is determined on a case by case basis.
In the United States co-insurance is common with health and medical insurance (often called coapy) and property insurance.
Usually the co-insured amount will not go over the 50% mark, and as part of some agreements, the policy holder is only required to pay their percentage up to a certain amount, with any extra costs being 100% covered by the insurance company.