Homeowners Coverage Calculator
Check your dwelling cover against the coinsurance clause, which penalises every partial claim if you insure below the required share.
Rebuild cost is what a builder would charge to put the structure back, with no land in it. Your insurer will estimate it; a local builder is the sanity check. Not every policy carries a coinsurance clause and the required share varies, so read yours before relying on 80%. Nothing is uploaded.
Market value and rebuild cost are unrelated numbers
What a house would sell for and what it would cost to rebuild have almost nothing to do with each other, because one includes the land and the other does not. In an expensive location the sale price can be double the rebuild cost; where land is cheap and construction is not, the rebuild can exceed anything the house would fetch. So insuring for the price you paid is not the cautious choice — it is a guess with no particular relationship to the right answer, and which direction it errs in depends on your postcode rather than your prudence.
Under-insuring is penalised on every partial claim
The intuition is that insuring for less simply lowers your ceiling — cover $300,000 of a $400,000 house and you are fine until the loss passes $300,000. That is not how the coinsurance clause works. Carry less than the required share and every partial claim is scaled down by the ratio of what you carried to what you should have. A $100,000 kitchen fire pays $91,750 instead of $98,000 — a $6,250 penalty on top of the deductible, on a claim that is a third of the sum insured.
| Insured for | Share of rebuild | Claim is scaled to | $100,000 loss pays | Penalty |
|---|---|---|---|---|
| $400,000 | 100% | 100.0% | $98,000 | none |
| $360,000 | 90% | 100.0% | $98,000 | none |
| $320,000 | 80% | 100.0% | $98,000 | none |
| $300,000 | 75% | 93.8% | $91,750 | $6,250 |
| $260,000 | 65% | 81.3% | $79,250 | $18,750 |
| $200,000 | 50% | 62.5% | $60,500 | $37,500 |
Two things worth reading off that table. Meeting the 80% requirement pays the loss in full, and going above it buys nothing extra on a partial claim — the ratio stops at one, so over-insuring is wasted premium rather than a safety margin. And the penalty grows the further short you fall: at 50% of the rebuild cost the same $100,000 loss pays $60,500, short by $37,500. The clause is not a deterrent that applies to total losses; it applies to the small claims that actually happen.
How to use
- Enter the cost to rebuild, not what the house would sell for.
- Enter what you are insured for and the required share.
- Add a loss amount to test.
- Read the payout and any coinsurance penalty.
Frequently asked questions
Should I insure for market value or rebuild cost?
Rebuild cost, and the two are unrelated numbers because one includes the land and the other does not. In an expensive location the sale price can be double the rebuild cost; where land is cheap and construction is not, the rebuild can exceed anything the house would fetch. Insuring for what you paid is a guess, not a cautious choice.
What is a coinsurance clause?
A requirement to insure at least a set share of replacement cost, typically 80%. Fall short and every partial claim is scaled down by the ratio of what you carried to what you should have carried. It is not a rule about total losses — it applies to the ordinary claims that actually happen.
What does under-insuring actually cost me?
More than the shortfall suggests. Insure $300,000 of a $400,000 rebuild and a $100,000 kitchen fire pays $91,750 rather than $98,000 — a $6,250 penalty on top of the deductible, on a claim that is only a third of the sum insured. The intuition that under-insuring merely lowers your ceiling is wrong.
Is there any benefit to over-insuring?
Not on a partial claim. The ratio stops at one, so cover above the required share is wasted premium rather than a safety margin. It raises the ceiling for a total loss and does nothing else.
How do I find my rebuild cost?
Your insurer will estimate it, and a local builder is the sanity check. It is the cost to put the structure back with no land in it, which is why it moves with construction prices rather than with the property market.
Does every policy have this clause?
No, and the required share varies where it exists. Some policies use replacement-cost cover with no coinsurance provision at all. Read yours before relying on the 80% figure, which is a common convention rather than a universal rule.
What happens if my rebuild cost rises after I buy the policy?
You can drift below the requirement without changing anything, which is how construction inflation quietly creates a penalty. Many policies include an inflation adjustment for exactly this reason; it is worth checking that yours does and that it has kept pace.
Does this send anything anywhere?
No. Every figure is computed in your browser, and nothing is uploaded or stored.
🔒 This tool runs entirely in your browser. Nothing you enter is uploaded, logged, or stored.