Insurance claim payout calculator to estimate a settlement or required covered loss from depreciation, deductible, insurer share, limits, and prior payments.
Insurance Claim Payout Formula
A simplified property or casualty claim begins with the covered loss, adjusts it to the selected valuation basis, subtracts the deductible, applies the insurer's share, and caps the result at the policy limit:
Eligible Value = Covered Loss * (1 - Depreciation Rate)
Payout = max(0, min(Policy Limit, (Eligible Value - Deductible) * Insurer Share) - Prior Payments)
Variables:
- Covered Loss is the amount of damage that falls within the modeled coverage
- Depreciation Rate is used only for actual cash value claims
- Deductible is the claimant's initial share of the covered loss
- Insurer Share is the percentage paid after the deductible
- Policy Limit is the maximum available for the modeled coverage
- Prior Payments are amounts already paid on the same limit
Replacement-cost claims can initially pay actual cash value and release recoverable depreciation after repairs. This calculator gives a planning estimate rather than a claim determination.
Claim Payout Examples
These examples assume a 100% insurer share after the deductible and no prior payments.
| Covered loss | Valuation | Deductible | Policy limit | Estimated payout |
|---|---|---|---|---|
| $20,000 | Replacement cost | $1,000 | $100,000 | $19,000 |
| $20,000 | ACV, 25% depreciation | $1,000 | $100,000 | $14,000 |
| $150,000 | Replacement cost | $5,000 | $100,000 | $100,000 |
| $8,000 | ACV, 40% depreciation | $5,000 | $50,000 | $0 |
Example Problems
Example 1: Estimate an actual cash value payout.
A covered loss is $40,000, depreciation is 25%, the deductible is $2,500, and the applicable limit is $100,000.
The eligible actual cash value is $30,000. After the deductible, the estimated payout is $27,500.
Example 2: Apply a policy limit and prior payment.
A replacement-cost loss produces $120,000 after the deductible, but the applicable limit is $100,000 and $15,000 has already been paid.
The remaining modeled payout is $85,000 because the total payment cannot exceed the $100,000 limit.
Frequently Asked Questions
Is the deductible subtracted before or after depreciation?
Many actual cash value claim estimates apply depreciation to replacement cost and then subtract the deductible, but policy language and claim practices can vary. Use the insurer's statement of loss when available.
What is recoverable depreciation?
It is depreciation that may be released under replacement-cost coverage after qualifying repairs or replacement are completed and documented. The initial check can therefore be lower than the final covered amount.
Why might the insurer pay less than this estimate?
Exclusions, sublimits, coinsurance penalties, multiple deductibles, noncovered damage, betterment, salvage, and disputed scope or pricing can all change the actual settlement.
