Consumer Mathematics: Insurance · 3.1.3
Insurance deductibles and co-insurance
Students apply deductible (the fixed amount a policyholder pays before the insurer pays anything) and co-insurance (a set percentage split of a claim between insurer and policyholder) to work out actual claim payouts and out-of-pocket costs in realistic insurance scenarios, combining these ideas with earlier premium and rate calculations.
The official learning standard (3.1.3)
“Solve problems involving insurance including deductible and co-insurance.”
What it means
Students apply deductible (the fixed amount a policyholder pays before the insurer pays anything) and co-insurance (a set percentage split of a claim between insurer and policyholder) to work out actual claim payouts and out-of-pocket costs in realistic insurance scenarios, combining these ideas with earlier premium and rate calculations.
How it is examined
This standard appears in Paper 2 as a multi-step consumer mathematics question: given a claim amount, a stated deductible and a co-insurance percentage, students calculate what the insurer pays and what the policyholder still owes. Paper 1 may test the concept alone, asking students to identify deductible or co-insurance from a description.
Worked example
A homeowner's insurance policy has a deductible of RM500 and a co-insurance rate of 80/20 (insurer pays 80%, policyholder pays 20%) applied after the deductible. A claim of RM6,500 is made for storm damage.
Calculate the amount paid by (a) the policyholder and (b) the insurance company.
- Subtract the deductible from the claim: RM6,500 − RM500 = RM6,000
- Apply the co-insurance split to the remaining RM6,000: insurer pays 80% × RM6,000 = RM4,800
- Policyholder pays 20% × RM6,000 = RM1,200, plus the deductible RM500
- Total policyholder payment = RM1,200 + RM500 = RM1,700
Source:DSKP KSSM Mathematics Form 4 and 5 (Versi English)
Frequently asked questions
What is the difference between deductible and co-insurance?
A deductible is a fixed amount you pay first before the insurer contributes anything; co-insurance is a percentage split (e.g. 80/20) applied to the remaining claim amount after the deductible.
Both reduce how much the insurance company pays out, and a claim can involve one, the other, or both together.
Do I always add the deductible to my co-insurance share?
Yes, the deductible and your co-insurance percentage of the remaining claim are separate amounts you pay, so add them together to find your total out-of-pocket cost. Only subtract the deductible once, from the original claim amount, before working out the percentage split.
What if the claim amount is less than the deductible?
If the claim is smaller than or equal to the deductible, the policyholder pays the entire claim amount and the insurer pays nothing, since co-insurance only applies to the portion of a claim above the deductible.