Are the concepts of deductibles and co-insurance in the insurance industry the same? Discuss.

The concepts of deductibles and co-insurance in the insurance industry are not the same and has a distinctive meaning and application. Deductible is the amount that the insured must payout-of-pocket before the insurer pays its share. It is common in almost all types of insurance policies to stipulate that a definite part of the claim or amount of money will be borne by the insured. The insurer will be liable to any claim beyond that limit / deductible. This is to make the insured more responsible and behave rationally in case of a loss. Deductible are not found in life policies but are very common to non-life policies like fire, health, marine, motor car etc. They are not present in personal liability insurance policies. Deductible may be of two classes compulsory and voluntary. Voluntary deductibles will result in a discount on the premium charged for the risk. Co-insurance, on the other hand, result in two or more insurers sharing the risk of the policies because of the character of risks involved or the magnitude of the cover. All co-insurance obligations are agreed upon between/among the insurers before the issue of the policy. Normally one of the insurers who possibly share a greater quantum of the risks is called the lead insurer who generally deals with the insured on behalf of all the underwriters. The co-insurance clause basically is based on the principle of Contribution. It is also called as collective insurance. Normally each insurer issues a policy with the specification or schedule giving a description of the property insured with a co-insurance clause included therein. In the event of a claim, all co-insurers will contribute towards settling it to the extent that each one has agreed to share the risk. All the co-insurers will collectively compensate the insured.