Home Coinsurance Calculator

A coinsurance clause requires you to insure at least a stated percentage of replacement cost - commonly 80%. Fall below it and the insurer pays claims in the same proportion you were short, even on a small partial loss that is nowhere near the policy limit.

This is the most expensive surprise in property insurance, precisely because it applies to ordinary claims rather than only to total losses. This calculator shows what the penalty would be at your current limit.

Result

Estimated payout

$74,000

Coinsurance penalty

$25,000

Requirement status: Coverage is below the requirement - a penalty applies
Coverage required: $400,000
Coverage carried: $300,000
Shortfall: $100,000
Payment ratio applied: 75%
Deductible applied: $1,000
Your total cost: $26,000

This is an estimate based on the values you entered. Actual premiums, coverage, eligibility and pricing vary by provider and by individual circumstances.

A coinsurance clause requires you to insure at least a stated percentage of replacement cost. Fall short and the insurer pays claims in the same proportion, even on a partial loss well below the limit.

This is one of the most expensive surprises in property insurance, because it applies to ordinary small claims, not just to total losses.

How to use the home coinsurance calculator

Enter the full replacement cost of the property.
Enter the coverage you actually carry.
Enter the coinsurance percentage your policy requires - check the declarations page.
Enter the size of the loss and your deductible, then read the payout and the penalty.

What people use this for

Checking whether an existing dwelling limit satisfies the coinsurance requirement.
Understanding a settlement that came back lower than expected.
Deciding whether to raise a limit after construction costs rose.
Reviewing a commercial or landlord property policy, where coinsurance clauses are near universal.

Worked examples

Every figure below is produced by running this calculator against the example inputs, so the numbers always match the tool.

Insured to 60% of rebuild cost

A property costing $500,000 to rebuild, insured for $300,000 against an 80% requirement, with a $100,000 partial loss and a $1,000 deductible.

Estimated payout: $74,000
Coinsurance penalty: $25,000
Payment ratio applied: 75%

Meeting the requirement

The same property insured for $410,000, which exceeds the 80% requirement.

Estimated payout: $99,000
Coinsurance penalty: $0
Requirement status: Coverage meets the coinsurance requirement - no penalty

How the penalty is calculated

The insurer divides the coverage you carried by the coverage you should have carried, and pays that proportion of the loss. Insured for $300,000 against a $400,000 requirement, the ratio is 75%, so a $100,000 loss pays $75,000 before the deductible.

The $25,000 difference is not a limit issue - the policy limit was never reached. It is a penalty for insuring to value below the required percentage, and it applies regardless of how small the claim is.

How to stay above the line

Get the rebuild cost right, then keep it current. Construction inflation moves the requirement upward every year even when nothing about the property changes, which is why inflation guard endorsements exist.

Adding an extended replacement cost endorsement, and re-checking the limit after any renovation, are the two practical protections. Both are cheaper than discovering the ratio during a claim.

Methodology and assumptions

What this calculator does, and what it deliberately does not do.

Required coverage is replacement cost multiplied by the coinsurance percentage. The payment ratio is coverage carried divided by required coverage, capped at 100%.
The payout is the loss multiplied by that ratio, less the deductible, capped at the coverage carried.
Policy wording varies. Some forms waive coinsurance on small losses or where an agreed-value endorsement applies.
All figures are estimates produced from the values you enter. This site has no rate feed and no carrier data, so it cannot quote or price a policy.
Nothing you type is transmitted or stored - the calculation runs entirely inside your browser.

This calculator provides an estimate based on the information you enter. Actual insurance premiums, coverage, eligibility and pricing vary by provider and individual circumstances.

This website is not an insurance company, an insurance agency or a licensed broker. It does not sell insurance, does not provide insurance quotes, and is not authorised to give advice about which policy you should buy.

No result produced here is an offer of insurance or a guarantee of coverage. Only a licensed insurer or agent, working from your verified details, can quote or bind a policy.

Frequently asked questions

Do all homeowner policies have a coinsurance clause?

Not all, but many do, and commercial property and landlord policies almost always do. The declarations page states the percentage where one applies.

Does coinsurance apply to a total loss?

The effect is usually invisible on a total loss because the limit itself caps the payout. It is on partial losses that the penalty becomes obvious.

What is an agreed value endorsement?

An endorsement where the insurer agrees a value in advance and waives the coinsurance provision. It usually requires a supporting valuation.

Is coinsurance the same as a deductible?

No. A deductible is a fixed amount you pay on every claim. Coinsurance is a proportional reduction applied because the property was insured below the required value.

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