What principle insures part of the potential loss, with policyowners paying the other part?

The principle that insures part of the potential loss with policyholders covering the other part is known as coinsurance. In this arrangement, both the insurer and the insured have a financial stake in the risk. Coinsurance is often structured so that the insured agrees to pay a certain percentage of the loss after a specified deductible has been met. This encourages policyholders to be more cautious, as they directly share in the costs associated with their claims.

In contrast to coinsurance, pooled insurance involves a collective approach where multiple individuals combine their risks into a shared fund, but this does not inherently involve an agreement on sharing losses in the same manner as coinsurance. Risk sharing is a broader concept wherein multiple parties assume risk, but it does not specifically indicate how losses are paid. Deductible split refers to the allocation of deductibles within policy structures but does not effectively describe the mechanism of sharing losses as coinsurance does.