Glossary

Insurance to value

The ratio of the coverage on a home to what it would cost to rebuild it today; 100% means the limit matches the rebuild cost.

Also called: ITV, insurance-to-value ratio

Insurance to value (ITV) compares the amount of coverage on a home with what it would cost to rebuild. The formula is the Coverage A limit divided by the replacement cost, times 100. A $320,000 limit on a home that would cost $400,000 to rebuild is 80% insured to value. The benchmark is the rebuild cost, not the price the house would sell for.

Insurers watch this ratio closely. They run estimating software when they write the policy, often raise limits at renewal, and in the standard ISO HO-3 the loss settlement clause pays full replacement cost on a building only if you carry at least 80% of its rebuild cost. Below that, a partial loss is paid on a reduced basis, and the shortfall comes out of your pocket. A limit that once looked adequate can fail after a remodel or a jump in costs.

Going the other way does not help. Coverage above the true rebuild cost raises the premium, and the insurer will not pay more than the actual cost to repair or rebuild. Aim for a limit close to 100% of a sound estimate. The coinsurance and insurance-to-value calculator shows what a low ratio does to a claim, coinsurance explains the clause behind it, and How much dwelling coverage do I need? covers how to set the limit.

Last reviewed October 10, 2026

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Related terms

Coinsurance A policy clause that reduces a claim payment when the insurance carried falls below a required percentage of the property's value, usually 80% for homes. Underinsurance Carrying a coverage limit below what a loss would cost to repair or rebuild, which leaves the owner to pay the gap. Replacement cost estimate A calculation of what it would cost to rebuild a home today, from its size, construction details and local labor and material prices. Dwelling coverage (Coverage A) The part of a homeowners policy that pays to repair or rebuild the house itself, including attached structures such as a garage, porch or deck. Replacement cost What it would cost to repair or rebuild with materials of like kind and quality at today's prices, with no deduction for age or wear. Inflation guard An endorsement that raises your coverage limits a set percentage each year so they keep pace with rising rebuilding costs between renewals.

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Related tools

Coinsurance and insurance-to-value calculator Test your dwelling limit against the 80% insurance-to-value rule and see how much a partial loss claim shrinks if you fall short. Home replacement cost estimator Estimate what it would cost to rebuild your house from the ground up, the number your dwelling coverage should match, using a per-square-foot cost you supply.