Calculate Your Insurance Claim Recovery Amount with this Simple Formula – Explained

(Insurance Carried / Insurance Required) x Loss Amount =

Loss payment

Recovery Amount

This formula is used to calculate the recovery amount in an insurance claim. The recovery amount represents the amount that an insured party can receive from an insurance policy to cover the losses they have incurred due to an insured peril.

The formula takes into account the insurance carried by the policyholder, the insurance required based on the value and type of loss, and the actual loss amount. By multiplying the insurance carried by the policyholder with the loss amount and dividing the result by the insurance required, the formula calculates the maximum recovery amount that the policyholder can receive from the insurance claim.

For example, if a policyholder has insurance coverage of $50,000, and the insurance required for a specific type of loss is $100,000, and the actual loss amount incurred is $20,000, the recovery amount for the policyholder would be ($50,000/$100,000) x $20,000 = $10,000. This means the policyholder can receive a maximum of $10,000 from the insurance policy as coverage for the loss incurred.

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