Commercial Property Coinsurance Penalty Calculator

Quantify how a coinsurance clause trims a commercial property claim when limits trail the required percentage. Enter the building's replacement cost, the limit carried, and the covered loss amount to reveal the required insurance threshold, any shortfall, and the net payout after deductibles once the penalty factor is applied.

Full replacement cost or insured value of the covered property.
Limit of insurance carried on the property schedule.
Dollar amount of the covered property loss you are filing.
Defaults to 80% when blank. Enter the coinsurance percentage listed on the policy.
Defaults to $0.00 if left blank.

Consult your insurance broker or carrier for policy-specific definitions, valuation clauses, and endorsements before relying on these figures for coverage decisions.

Examples

  • Example 1 — $4,500,000.00 building value, $3,200,000.00 limit, $900,000.00 loss, 80% coinsurance, $25,000.00 deductible ⇒ Coinsurance penalty applies. Required coverage: $3,600,000.00 USD | Limit shortfall versus requirement: $400,000.00 USD | Coinsurance factor applied: 88.89% | Insurer payment after deductible: $775,000.00 USD | Coinsurance penalty on this loss: $100,000.00 USD | Remaining uninsured loss: $125,000.00 USD
  • Example 2 — $6,000,000.00 building value, $5,400,000.00 limit, $1,200,000.00 loss, coinsurance left blank (defaults to 80%), deductible blank ⇒ Coinsurance requirement satisfied. Required coverage: $4,800,000.00 USD | Limit shortfall versus requirement: $0.00 USD | Coinsurance factor applied: 100.00% | Insurer payment after deductible: $1,200,000.00 USD | Coinsurance penalty on this loss: $0.00 USD | Remaining uninsured loss: $0.00 USD

FAQ

What coinsurance percentage should I enter?

Use the percentage printed on your declarations page or property schedule. If you leave it blank the calculator assumes an 80% requirement, which is common but not universal.

Does the tool handle agreed value endorsements?

Yes—set the coinsurance percentage to 0% or leave the policy limit equal to the required coverage amount to see that no penalty applies under an agreed value endorsement.

How do I include blanket coverage across multiple buildings?

Enter the total insured value of all covered locations for the building replacement cost input and the blanket limit for the policy limit. The coinsurance comparison uses aggregate values.

Can I test higher limits for renewal planning?

Yes—adjust the policy limit field to your proposed limit to see how much coinsurance headroom you gain before meeting with your broker.

Additional Information

  • Coinsurance clauses typically require insuring 80%, 90%, or 100% of replacement cost—falling short reduces every claim proportionally.
  • The calculator caps payouts at the policy limit even when the loss is smaller than the limit, mirroring how insurers settle claims.
  • Deductibles are subtracted after the penalty factor is applied, matching property policy wording that applies deductibles to the payable loss.
  • Limit shortfall highlights how much additional coverage would eliminate the penalty next renewal cycle.
  • All monetary outputs assume USD but remain valid for any currency when inputs share the same unit.

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