Homeowners Insurance Coverage Gap Calculator
Use this free homeowners insurance coverage calculator to check whether you are underinsured under the 80% rule. Enter your home's replacement cost, your current dwelling coverage, and the size of a hypothetical loss — this tool shows whether you fall below the 80% threshold and roughly what that would cost you out of pocket on a partial loss.
Check Your Coverage for Underinsurance
What Is the 80% Rule in Homeowners Insurance?
The 80% rule is an insurance-to-value condition in the loss settlement section of the standard ISO homeowners form (HO-3) and many carrier forms modeled on it. It asks you to carry dwelling coverage equal to at least 80% of your home's full replacement cost — the cost to rebuild the structure at today's construction prices, not its market value. Meet that threshold and a covered partial loss is paid at replacement cost, without deduction for depreciation, up to your limit and minus your deductible. Fall short and the policy pays the larger of two amounts: the actual cash value of the damaged part (replacement cost minus depreciation), or a proportional share of the replacement cost equal to your coverage divided by 80% of the home's replacement cost.
Here is what that looks like with this calculator's default numbers: a home that costs $500,000 to rebuild, insured for $350,000 (70%), with a $50,000 partial loss on 15-year-old materials and a $2,500 deductible. At 80% or more, the payout would be $47,500. At 70%, the proportional share is $350,000 ÷ $400,000 = 87.5% of $50,000, or $43,750. The actual cash value estimate is lower, so the carrier pays $43,750 minus the deductible, or $41,250. That $6,250 difference is the cost of being below the line on one claim. Policy wording varies by carrier, so check the loss settlement section of your own policy. This calculator runs that test so you can fix a shortfall before you have a loss.
How Homeowners Coinsurance Differs From Commercial Property Coinsurance
Commercial property policies with a coinsurance clause use a straight proportional formula: (coverage carried ÷ coverage required) × loss, and then the deductible. If you carry 70% of the required amount, you collect 70% of the loss. If you own a commercial building, our commercial claim support page explains how we handle those claims.
Standard homeowners policies are more forgiving. Below 80%, they pay the larger of the actual cash value or the proportional share, so a homeowner never receives less than the proportional amount, and on newer damage the actual cash value can be higher. Either way, the payout is less than full replacement cost. This tool calculates both methods so you can see the outcome under your policy type. To see how depreciation is figured on a claim, try our ACV vs. RCV calculator.
Four Things Most Homeowners Get Wrong About Insurance Coverage
Market value is not replacement cost
Market value includes the land, the neighborhood, and comparable sales. Replacement cost is purely the cost to rebuild the structure. In expensive real estate markets, market value can be well above replacement cost; in rural areas, replacement cost can exceed market value. Insuring to market value gets the number wrong in both directions, and the 80% test is measured against replacement cost.
Rebuilding costs change; your limit may not
Material, labor, and code-upgrade costs move every year. Unless your policy has an inflation guard that adjusts your limit automatically, or you update the limit at renewal, a limit that cleared 80% when you bought the policy can fall below it later without any change on your part. Ask your agent for a fresh replacement cost estimate at renewal.
The 80% rule applies to partial losses too
Many homeowners assume underinsurance only matters on a total loss. The 80% condition applies to partial losses as well. Take a $30,000 kitchen fire on a home insured at 70% of its replacement cost: the proportional share is 87.5% of $30,000, or $26,250 (or the actual cash value, if that is higher), before the deductible. The homeowner absorbs the difference plus the deductible.
Extended and guaranteed replacement cost endorsements have conditions
Extended replacement cost adds a set percentage above your dwelling limit (commonly 25% or 50%), and guaranteed replacement cost raises the limit to the actual rebuild cost. They protect you when rebuilding costs outrun your limit, but they commonly require you to insure to 100% of the estimated replacement cost and to report additions or renovations. Terms, availability, and price vary by carrier, so ask your agent at renewal.
Homeowners Insurance Coverage Gap Calculator FAQs
The 80% rule is an insurance-to-value condition in many standard homeowners policies. It asks you to carry dwelling coverage equal to at least 80% of your home's replacement cost. If you meet it, covered partial losses are paid at replacement cost, without deduction for depreciation, up to your limit. If you fall short, the policy pays the larger of the actual cash value of the damage or a proportional share of the replacement cost (your coverage divided by 80% of the replacement cost). It applies to partial losses, not only total losses.
The most accurate way is to ask your insurance agent for a current replacement cost estimate, which carriers produce with estimating tools like e2Value, 360Value, or Marshall & Swift/Boeckh. You can also hire an independent appraiser who specializes in insurance valuations. A rough check is square footage times the local cost per square foot to build, but it misses upgrades, architectural details, and code-upgrade costs, so treat it as a starting point.
No, and confusing the two is a common mistake when setting coverage. Market value includes the land, the neighborhood, and comparable sales data. Replacement cost is only what it would take to rebuild the physical structure from scratch at today's construction prices. In expensive markets, market value is usually higher than replacement cost; in rural or lower-cost areas, replacement cost can exceed market value. Set your coverage based on replacement cost.
A coinsurance penalty is the reduction in a claim payment when you carry less insurance than the policy's coinsurance or insurance-to-value condition requires. On commercial property policies it is proportional: (coverage carried ÷ coverage required) × loss, then the deductible. On standard homeowners policies, you are paid the larger of the actual cash value of the damage or that same proportional share of replacement cost.
On a total loss, your dwelling payout is capped at your dwelling limit, so an underinsured home comes up short. On a $500,000 home insured for $350,000, the most the dwelling coverage pays is $350,000, leaving at least $150,000 of rebuild cost uncovered. Insuring to full replacement cost, keeping the limit current, and extended or guaranteed replacement cost endorsements are the main ways to prevent this.
Three steps: (1) Get an accurate replacement cost estimate from your agent or an independent appraiser, not your home's market value. (2) Keep your dwelling coverage (Coverage A) at no less than 80% of that estimate, and ideally at 100%. (3) Ask about inflation guard so the limit adjusts each year, and about extended or guaranteed replacement cost endorsements, which usually require insuring to 100% and add protection above the limit.
The 80% rule comes from the loss settlement condition in the policy, not from a statute, so it applies wherever a policy containing it is issued. Some policies use a different percentage (90% or 100%) or different wording, and some endorsements change the settlement terms. Check the loss settlement section of your policy to see what yours says.
Already Dealing With an Underpaid Claim?
If you've been underpaid on a property damage claim because of a coinsurance penalty, an actual cash value settlement, or a depreciation dispute, a licensed public adjuster can review your policy and the carrier's estimate. Shoreline Public Adjusters is licensed in Florida, Minnesota, Wisconsin, North Dakota, and South Dakota, and handles residential and commercial property claims. If your property is in another state, look for a public adjuster licensed there.
Request a Free Claim ReviewDisclaimer
This Homeowners Insurance Coverage Gap Calculator is provided by Shoreline Public Adjusters, LLC for general informational and educational purposes only. The results shown are illustrative examples based on loss settlement terms common to standard homeowners forms (the 80% condition) and a simplified depreciation model (straight-line, 60-year life, capped at 80%), and should not be relied upon as a definitive evaluation of any specific insurance policy or claim. Actual coverage, coinsurance requirements, and claim settlements depend on the specific language in your policy, applicable endorsements, state law, and the facts of your loss.
Shoreline Public Adjusters makes no warranties or guarantees, express or implied, regarding the accuracy, completeness, or applicability of any calculation, threshold, or information on this page. Insurance policies vary widely — some use 80% coinsurance, others use 90% or 100%, some have agreed-value endorsements that suspend coinsurance entirely, and some include extended or guaranteed replacement cost endorsements that change the analysis. The depreciation estimate used in this tool is a simplified approximation and does not reflect the carrier's specific depreciation schedule, state rules on labor depreciation, or condition-based adjustments that may apply to your actual claim.
This calculator does not constitute legal advice, insurance advice, or a binding evaluation of any policy or claim. Nothing on this page creates an adjuster-client, attorney-client, or insurance agent relationship. Before making any decision related to your insurance coverage or a pending claim, consult your policy declarations page, your insurance agent, and — for claim disputes — a licensed public adjuster or attorney in your jurisdiction. Replacement cost values change frequently with construction costs; verify with a current replacement cost estimator rather than relying on older appraisals or assumptions.
Shoreline Public Adjusters, LLC · FL G199012 · MN 40962416 · WI 21156868 · ND 3004392416 · SD (SD does not issue license numbers)