Coinsurance Shortfall Calculator

Underinsured property triggers coinsurance penalty. This calculator sizes the penalty.

Replacement cost

Coinsurance %

Insured value

Loss amount

Actual recovery

$166,667

Penalty amount

$33,333

Coinsurance ratio

83.33%

How the math works

Recovery = loss × (insured ÷ required). Penalty = loss − recovery.

Under-insuring is penalized on every claim, not just total loss. $200k partial loss on underinsured property can lose $50k to coinsurance. Maintain insurance at 90%+ of RCV.

How to Use

Enter replacement cost value.
Enter coinsurance requirement %.
Enter insured value.
Enter loss amount.
Read recovery and penalty.

Frequently Asked Questions

Coinsurance mechanic?

Policies require insurance at 80-100% of replacement cost. If insured below requirement, payout = loss × (insured ÷ required). Even small losses penalize.

80% trigger?

Insuring to 80% of RCV is common minimum. Payout formula: loss × (actual insurance ÷ required insurance). Insuring at 70% on $1M property = 70/80 = 87.5% of any claim.

Avoiding?

Annual RCV updates. Agreed-value endorsement (eliminates coinsurance). Inflation guard policy. Review after renovations. Underinsurance is most common and worst insurance mistake.

How does this affect my portfolio-level metrics?

Single-asset impact rarely matters in isolation for a portfolio of 20+ assets, but systematic patterns do. If the same issue shows up across 10% of your portfolio, the aggregate impact is meaningful. Track this metric at the portfolio level quarterly. Institutional operators aggregate these monthly into a KPI dashboard for investors and lenders.