Insurance Policy-Limit Gap

Check a property policy for underinsurance: compare the replacement cost value to your Coverage A limit to see the dollar gap and the percentage insured, and whether you meet a coinsurance requirement (often 80%). Falling under coinsurance can cut a partial-loss payout.

Try it now

Worked example

Coverage gap: $80,000.00 · % of replacement insured: 80% · Coinsurance: Meets the 80% requirement

Learn the method

Inputs

Replacement cost value $
400000
Coverage A limit $
320000
Coinsurance required %
80

Frequently asked

What is coinsurance?

A policy clause requiring you to insure to a set percentage (often 80%) of replacement cost. Fall below it and the insurer can reduce even a partial-loss payment proportionally.

Is replacement cost the same as market value?

No — replacement cost is what it costs to rebuild; market value includes land and location. Insure to replacement cost, not market value.