Insurance Claim Settlement Calculator
Estimates the net payout you can expect from an insurance claim after applying your deductible, depreciation, and coinsurance terms. Use it before filing a claim to set realistic expectations.
About this calculator
An insurance claim settlement is rarely equal to the full damage amount — several policy mechanics reduce it. The formula is: Payout = min(max(0, (claimAmount − deductible) × depreciation × coinsuranceRate), coverageLimit). First, the deductible is subtracted because that is your mandatory out-of-pocket share. The remainder is multiplied by a depreciation factor (0–1) representing the item's lost value due to age and wear. Then a coinsurance rate (also 0–1) is applied to account for policies where the insurer only covers a stated percentage of losses. Finally, the result is capped at the policy's coverage limit. Using actual cash value (ACV) settlement means depreciation is applied; replacement cost value (RCV) policies use a depreciation factor of 1.0.
How to use
A homeowner files a $20,000 water damage claim. Policy deductible: $1,000. Depreciation factor: 0.75 (items are 25% depreciated). Coinsurance rate: 0.90 (90% coinsurance clause). Coverage limit: $15,000. Step 1 — subtract deductible: $20,000 − $1,000 = $19,000. Step 2 — apply depreciation: $19,000 × 0.75 = $14,250. Step 3 — apply coinsurance: $14,250 × 0.90 = $12,825. Step 4 — cap at coverage limit: min($12,825, $15,000) = $12,825. The expected payout is $12,825, leaving the homeowner with $7,175 in unrecovered costs.
Frequently asked questions
What is a coinsurance rate and how does it affect my claim payout?
Coinsurance is a policy provision requiring you to insure your property to a minimum percentage of its full replacement value — commonly 80% or 90%. If you are underinsured relative to that threshold, the insurer proportionally reduces your claim payment. For example, if your home is worth $300,000 but you only insure it for $200,000 under an 80% coinsurance requirement, you have only covered 83% of the required 80%, and your payout will be reduced accordingly. This calculator represents coinsurance as a decimal multiplier (e.g., 0.90) applied after depreciation. Always insure your property at or above the coinsurance threshold to avoid unexpected payout reductions.
What is the difference between actual cash value and replacement cost in a claim settlement?
Actual cash value (ACV) pays what a damaged item is worth today, factoring in age and wear — this is what the depreciation factor in the formula captures. Replacement cost value (RCV) pays what it would cost to buy an equivalent new item, effectively setting the depreciation factor to 1.0. RCV policies pay out significantly more but carry higher premiums. For older homes or belongings, the gap between ACV and RCV can be substantial; a 10-year-old roof claimed under ACV might receive only 30–40% of replacement cost. Knowing which method your policy uses before a loss is critical for financial planning.
When should I consider not filing an insurance claim?
Filing a small claim can cost more in future premium increases than the payout itself, so it is worth calculating the net benefit before submitting. A general guideline is to file only when the claim amount significantly exceeds your deductible — many advisors suggest a threshold of at least two to three times the deductible. Frequent claims can also trigger policy non-renewal, leaving you shopping for coverage at higher rates. Use this calculator to estimate your payout, then compare it against your projected premium increase (typically 10–40% per claim over 3–5 years) to decide whether filing makes financial sense.