Calculate the property coinsurance penalty and insurance payment when a building or contents are underinsured.
How the coinsurance penalty calculator works
Property policies with a coinsurance clause require the limit to be at least a set percentage (often 80%) of the property’s value at the time of loss. If it isn’t, the claim is reduced in proportion — the coinsurance penalty.
Formula
Payment = (Limit carried ÷ (Value × Coinsurance %)) × Loss − Deductible, up to the limit.
How to use it
Enter the replacement cost at the time of loss and the limit carried.
Choose the coinsurance percentage.
Enter the loss and deductible.
Worked example
A $1M building insured for $600K with 80% coinsurance should carry $800K. A $200K loss pays 600/800 × $200K − $2,500 = $147,500.
Frequently asked questions
How do I avoid a coinsurance penalty?
Carry a limit at or above the required percentage of current replacement cost, or use an agreed value endorsement.
Does coinsurance apply to total losses?
The formula applies to all losses, but payment is always capped at the limit.
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