Coinsurance Penalty Calculator

About this calculator

Property insurance policies often include a coinsurance clause requiring you to insure your property up to a set percentage of its value — commonly 80% — in exchange for full claim payouts. If you insure for less than that required amount, the insurer applies a coinsurance penalty: it pays only the fraction (amount of coverage carried divided by amount of coverage required) of the covered loss, leaving you to absorb the rest even though you had some insurance in place.

This calculator applies that formula to your specific policy limit, required coverage, and loss amount to show exactly how much a claim payout gets reduced by underinsuring. Property owners and business insurance buyers use it to check, before a loss ever happens, whether their coverage limit is actually high enough to avoid this penalty entirely.