What does the term "co-insurance" refer to in insurance?

Co-insurance refers to a provision within an insurance policy that requires the insured to share in the risk of loss by bearing a portion of the costs associated with a claim. This typically means that after the insurer pays a claim, the insured is responsible for covering a set percentage of the remaining costs, which encourages policyholders to insure their property to a value as close to its actual worth as possible. Co-insurance is especially common in property insurance, where it often requires the insured to maintain coverage equal to a specified percentage of the property’s value, or risk facing reduced payouts on claims.

The other choices do not accurately describe co-insurance. For instance, a type of insurance that covers all losses regardless of the amount would represent a different concept—typically referred to as "full coverage." Determining the value of an insured item relates more to appraisal methods than to co-insurance itself. Similarly, supplemental coverage adds additional features or benefits to a base policy but does not involve shared risk like co-insurance does. Thus, the definition in the correct choice captures the essence of co-insurance and its role in risk management and insurance contracts.