Loss Settlement Amount

Dictionary Says

Definition of 'Loss Settlement Amount'


A term used to denote the amount of a homeowner's insurance settlement. Homeowners are typically required to carry insurance that will cover at least 80% of the replacement value of their house. The loss settlement amount, the funds that the insurance company pays out to the homeowner, may be less than the amount of full coverage if the 80% coinsurance requirement is not met.

Investopedia Says

Investopedia explains 'Loss Settlement Amount'


The loss settlement formula works like this: If a homeowner with a $400,000 house carries only $300,000 of coverage, and sustains a loss of $150,000 from a fire, then less than the total amount of $150,000 will be reimbursed. The amount to be paid is computed by dividing the amount of insurance carried by the 80% requirement. This comes to $300,000 / $320,000 (80% of $400,000). The quotient is 0.94. Multiply this amount by the loss of $150,000 to get $140,625. This is the amount that will be reimbursed.



comments powered by Disqus
Hot Definitions
  1. Valuation

    The process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some are subjective and others are objective.
  2. Valuation

    The process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some are subjective and others are objective.
  3. Tech Street

    A term used in the financial markets and the press to refer to the technology sector. Companies like Intel, Microsoft, Apple and Dell are all considered to be part of Tech Street.
  4. Tech Street

    A term used in the financial markets and the press to refer to the technology sector. Companies like Intel, Microsoft, Apple and Dell are all considered to be part of Tech Street.
  5. Momentum Investing

    An investment strategy that aims to capitalize on the continuance of existing trends in the market. The momentum investor believes that large increases in the price of a security will be followed by additional gains and vice versa for declining values.
  6. Momentum Investing

    An investment strategy that aims to capitalize on the continuance of existing trends in the market. The momentum investor believes that large increases in the price of a security will be followed by additional gains and vice versa for declining values.
Trading Center