Coinsurance Calculator for Homeowners Insurance

A coinsurance clause can quietly cut a home insurance claim if your dwelling coverage is too low. This coinsurance calculator shows how a common proportional formula works, so you can see the cost of being underinsured before you ever file a claim. It is a planning tool, not a prediction of what your insurer will pay.

How to use this calculator

1. Replacement cost. This is the estimated cost to rebuild your home today with similar materials. It is not your market value or purchase price. Ask your insurer for the estimate behind your policy, or get a rough figure from the dwelling coverage estimator.
2. Dwelling coverage you carry. Find “Coverage A” or “Dwelling” on your declarations page.
3. Required coverage share. Look in the loss settlement or replacement cost section of your policy. 80% is common, but some policies require more.
4. Loss and deductible. Enter the repair cost of the covered damage and the deductible that applies to that type of loss. Your deductible is also on the declarations page.

How this calculator works

First, the tool finds the coverage your policy requires: replacement cost times the required percentage. Next, it divides the coverage you carry by that required amount. If you carry less, the insurer pays only that share of the loss; the share never goes above 100%. Then it subtracts your deductible. The payout can’t be less than $0 or more than your coverage limit.

Required coverage = Replacement cost × Required %
Ratio             = Coverage carried ÷ Required coverage (max 100%)
Payout            = Loss × Ratio − Deductible (between $0 and your limit)
You pay           = Loss − Payout
Penalty           = (Loss − Deductible, capped at your limit) − Payout

The penalty is the difference between what a fully insured owner would get and what you get. The default inputs are hypothetical. The tool assumes a covered dwelling loss settled at replacement cost and applies the deductible after the cut. Depreciation, separate wind or hurricane deductibles and other coverage parts are ignored.

Worked examples

Example 1 (default inputs, hypothetical). Replacement cost $400,000, coverage $280,000, 80% required, a $40,000 loss and a $1,000 deductible.

1. Required coverage: $400,000 × 80% = $320,000.
2. Ratio: $280,000 ÷ $320,000 = 87.5%.
3. Payout: $40,000 × 87.5% = $35,000, minus $1,000 = $34,000.
4. You pay: $40,000 − $34,000 = $6,000.
5. Penalty: a fully insured owner would get $40,000 − $1,000 = $39,000. $39,000 − $34,000 = $5,000.

Example 2 (fully insured, hypothetical). Same home and loss, but coverage is $320,000.

1. Ratio: $320,000 ÷ $320,000 = 100%.
2. Payout: $40,000 × 100% − $1,000 = $39,000.
3. You pay: $1,000 (just the deductible). Penalty: $0.

Raising the limit by $40,000 saved this owner $5,000 on one claim.

What your result means

If your penalty is $0, you meet the requirement for this loss. If it is above $0, you are underinsured under this formula, and every dwelling claim could be cut by the same share. The table uses the default home ($400,000 replacement cost, 80% required, $40,000 loss, $1,000 deductible).

Notice that going from $320,000 to $400,000 doesn’t change this partial claim. The extra coverage matters on a large or total loss.

Rules that change the answer

• Required share. The Texas Department of Insurance says most companies require at least 80% of replacement cost and some require 100% (TDI). Change the required percentage to match your policy.
• Policy formula. New York’s consumer guide walks through an underinsured roof claim being paid less (NY DFS). Policies differ on the exact math, and some pay the greater of a proportional amount or actual cash value.
• Separate deductibles. A hurricane, named storm or wind deductible can be a percentage of your limit. Enter that dollar amount as the deductible for storm losses; the percentage deductible calculator converts it.
• State rules. Each state regulates policy forms and claim handling. Your state insurance department can explain what applies.

Common mistakes

• Using market value as replacement cost. Market value includes land and can be far from rebuild cost.
• Thinking coinsurance only matters for total losses. It cuts partial claims too.
• Not updating after a remodel. Higher rebuild cost lowers your ratio.
• Entering the wrong deductible. Storm losses may use a separate, larger deductible.
• Treating this result as a settlement offer. Only your insurer’s adjustment, under your policy, decides the payment.

Limits and when to get help

This tool can’t read your policy, check whether a loss is covered or account for depreciation. Treat the result as an estimate. Ask your agent what share of replacement cost your policy requires and how your rebuild cost was estimated. If you disagree with a claim payment, ask the insurer to explain it in writing, and contact your state insurance department if needed (NAIC). Our guide on filing a home insurance claim covers the steps, and our guide to homeowners insurance coverage explains the 80% rule in more detail.