Which type of contract requires the insured to cover a percentage of losses along with the insurer?

A coinsurance contract is designed to share the burden of loss between the insured and the insurer, requiring the insured to cover a specified percentage of the losses incurred. This arrangement not only helps to lower the insurer's risk but also encourages the insured to be more cautious about their coverage and the potential for loss. In such contracts, the insured must maintain a minimum level of insurance or risk reduced benefits in case of a claim, which helps to ensure adequate coverage for both parties.

In contrast, a reinsurance contract involves the transfer of risk from one insurance company to another, allowing insurers to manage their risk exposure. A mutuality agreement typically refers to mutual insurance companies in which policyholders are also the owners of the company, not specifically outlining cost-sharing of losses like coinsurance. A liquidity agreement generally deals with maintaining cash flow and financial stability rather than risk-sharing in insurance contexts.