First Dollar Coverage, meaning in P&C world ??

[LostDollar]

Another vocabulary question.

What does First Dollar Coverage mean in the P&C world?

If a policy has a deductible for a coverage, is it still considered to provide first dollar coverage for that risk?

Thanks

 

[adjusterjack]

First dollar coverage has no deductible.

What is First Dollar Coverage? How to Explain 1st-dollar plan to clients? (leadsquared.com)

 

[Markthebroker]

Irmi is the goto for me and most of us in my office. Great resource.

[EXTERNAL LINK] - First Dollar Coverage | Insurance Glossary Definition | IRMI.com.

 

[LostDollar]

Irmi is the goto for me and most of us in my office. Great resource.

[EXTERNAL LINK] - First Dollar Coverage | Insurance Glossary Definition | IRMI.com.

Thank you.

So are the terms

Co-payment
and
Co-insurance

used only in Health Insurance situations then?

I had not seen any replies here yet, so I was doing a little searching myself this afternoon.

I saw the link you cited
[EXTERNAL LINK] - First Dollar Coverage | Insurance Glossary Definition | IRMI.com
Which says this:

First Dollar Coverage — insurance coverage that provides for the payment of all losses up to the specified limit without any use of deductibles.

Definitions along these lines:
https://www.kbibenefits.com/what-is-first-dollar-coverage

First dollar coverage insurance policies don't have a deductible, nor do they require copays or other out-of-pocket expenses before coverage commences. As a result, the insurer covers the entire payment when an insurable event occurs. That means that the insured doesn't pay anything out of pocket, and the insurance company covers the whole expense related to the loss—there is no financial pressure placed on the insured.

are more useful to me in the specific situation(s) I am thinking about.

I thought "First Dollar Coverage" would be another very general insurance term, like "deductible", that would have standard, generally accepted meanings for agents across a broad range of insurance coverage situations.

After some online reading, it is my belief, in a broad insurance definition sense, that an insurance policy which includes Co-Payment, Co-Insurance, OR Deductible requirements would not be considered to provide "First Dollar Coverage". I started this thread in an attempt to see if that is a correct assessment. (Rereading both this and my initial post, I see my concerns have evolved a bit since I started the thread.)

 

[Markthebroker]

I haven't heard the term co-payment in p&c, though after 11 years, I am still learning new things. We do have a self insured retention on some policies, which is more or less a deductible, which is conceptually more or less a deductible. So in that sense, yes, we do have co-payments. We call them deductibles.

Coinsurance, however, is something I am very familiar with, and means something quite different in p&c than in health.

[EXTERNAL LINK] - Property Insurance: Coinsurance | Expert Commentary | IRMI.com

 

[LostDollar]

So this from the article:

A "coinsurance" condition in a property insurance policy is analogous to the need for a standard definition of "payroll" to compute workers compensation premium.

Would mean the presence of "coinsurance" in a property policy would have no bearing on whether or not the property policy offered "first dollar coverage"?

(And by extension, my assumptions of how generally the term "first dollar coverage" can be applied across a range of insurance products is wrong.)

 

[LostDollar]

I haven't heard the term co-payment in p&c, though after 11 years, I am still learning new things. We do have a self insured retention on some policies, which is more or less a deductible, which is conceptually more or less a deductible. So in that sense, yes, we do have co-payments. We call them deductibles.

Coinsurance, however, is something I am very familiar with, and means something quite different in p&c than in health.

[EXTERNAL LINK] - Property Insurance: Coinsurance | Expert Commentary | IRMI.com

Ok, thanks.

Conceptually that sounds like my Medigap policy, I pay (self insure?) the first $2490 (2022 policy year) in claim amounts, then Medigap carrier picks up my split of the risk share between the Govt and me. I retain some risk to myself to lower the premium. Is that kinda what you are talking about?

Although, in my example from health, my self insured obligation is fulfilled at the beginning of the claims series. In your P&C example, does the insured's self retention obligation apply somehow on a claim by claim basis, or is it fulfilled in a block at the beginning of the claims year?

Also, a note to say I had made a very long post in the thread. After reading through it 2-3 times, I deleted it. My spine says somebody was reading it when I deleted it. If that was you, I apologize for inflicting it on you.

 

[adjusterjack]

In your P&C example, does the insured's self retention obligation apply somehow on a claim by claim basis, or is it fulfilled in a block at the beginning of the claims year?

Claim by claim. The deductible is applied to each claim. Example: your car is damaged, $3500 in repairs. You have a $500 deductible. You pay $500 and the insurance company pays $3000. Two weeks after the repairs are done, your car gets hit again. You'll pay another $500 towards the new repairs.

A word about self-insured retention. It's more widely used for liability insurance rather than property insurance. The insured gets a discount and is allowed to adjust his own liability claims within the self-insured retention amount. Example: A large trucking company carries a liability limit of $100,000,000 and pays a premium of $1,000,000 a year. He might have a $50,000 self-insured retention and get a nice discount for adjusting small liability claims within that $50,000 limit.

Here's another term from P&C that might interest you: Reinsurance. It's when an insurance company charges a premium to insure a risk, takes part of that premium and pays one or more other insurance companies to share part of the risk.

What is property and casualty reinsurance? (insuredandmore.com)

 

[scagnt83]

Here's another term from P&C that might interest you: Reinsurance. It's when an insurance company charges a premium to insure a risk, takes part of that premium and pays one or more other insurance companies to share part of the risk.

What is property and casualty reinsurance? (insuredandmore.com)

Reinsurance is very common in the life insurance world as well. Either for large death benefits or high risk insureds.