Co insurance & re insurance?

Question

are co insurance and re insurance the same???

Answer 1

No.

Co-insurance is your portion of the loss.    Re-insurance is an insurance policy that insurers buy through another insurance company, someone to help THEM share part of the loss (it's usually used for very LARGE losses).

Answer 2

No, they are completely different.

Co-insurance is a clause in many property insurance policies.  What it states is you have to be insured up to a certain % of replacement value in order for you to get replacement value on a claim (only up to your policy limit), otherwise you would have to pay a co-insurance penalty.  Say, the clause states you have to be insured to 100% (many policies say 80% but this is easier to explain this way).  The replacement value on the building is $200,000, you chose to be insured for only $100,000.  If there is a covered loss (say $100,000), since you were only insured to 50% of the replacement value, you get only 50% of the loss less your deductible, which would be $50,000 minus your property deductible.

Re-insurance is insurance that the insurance companies purchase to offset their losses.  A company may reinsure any losses that exceed $500,000 (so any building over $500,000 value would be reinsured, any liability limit over $500,000 would be reinsured).  The reinsurers also set some of the underwriting guidelines that the insurance company has to use.  The company has to go by these guidelines or risk losing their reinsurance.  Swiss-Re is a big reinsurer.