Insurance Coverage Gap Calculator
This coverage gap calculator identifies the difference between the insurance protection you need and what your current policies provide. An undetected coverage gap can leave you financially exposed in the event of a claim: a loss exceeding your coverage limits, an uninsured peril, or an underinsured asset. Enter your coverage need and your current in-force coverage for each insurance type to see the gap and whether you are adequately protected, over-insured, or under-insured. This tool covers life insurance, monthly disability income, property replacement cost, and personal liability limits.
Coverage gap formula
Coverage gap = Coverage needed - Current coverage in force
(Positive gap = under-insured; Zero or negative = adequately covered)
A positive gap indicates the amount of additional coverage to purchase. A negative gap means current coverage exceeds the estimated need, which may indicate over-insurance or that the need estimate should be revisited.
How to estimate your coverage needs
- Life: use the DIME method (Debt + Income replacement + Mortgage + Education) minus existing assets and life coverage.
- Disability: target 60 to 70 percent of gross monthly income from all disability sources combined.
- Property: insure at 100 percent of replacement cost (not market value) to avoid coinsurance penalties.
- Liability: carry at least as much umbrella liability coverage as your net worth, in addition to underlying auto and homeowner limits.
- Review all gaps annually or after major life changes: marriage, new child, home purchase, salary increase.
Coverage gaps: frequently asked questions
What is an insurance coverage gap?
A coverage gap is the difference between the amount of insurance protection you need and the amount you currently have. For life insurance, it is the difference between the income-replacement capital needed and the face amount of existing policies. For disability, it is the gap between needed monthly income replacement and current policy benefits.
How do I calculate the life insurance I need?
A common method is the DIME formula: Debt (all outstanding debts), Income (years of salary to replace times annual salary), Mortgage (outstanding balance), and Education (future education costs for dependents). Sum these minus existing assets and life insurance in force. The gap is how much additional coverage is needed.
What is an umbrella liability coverage gap?
An umbrella policy provides coverage above the limits of your auto or homeowner liability policies. The gap is the difference between your total liability exposure (assets at risk in a lawsuit) and the combined liability limit of your underlying policies. A common rule of thumb is to carry umbrella coverage equal to your net worth.
How do I close a coverage gap?
Life gaps can be closed by purchasing term or whole life insurance. Disability gaps can be closed by increasing group coverage or buying individual disability insurance. Property gaps require increasing dwelling or contents coverage limits. Liability gaps are addressed with umbrella policies. Consult a licensed insurance professional for complex gaps.
Should I adjust my coverage as life circumstances change?
Yes. Major life events that should trigger a coverage review include marriage, divorce, birth of a child, home purchase, significant salary increase, inheritance, retirement, or death of a co-insured. NAIC recommends reviewing all insurance coverage annually or after any major life change.
Official sources
- NAIC: NAIC Consumer Insurance Resources.
- Social Security Administration: SSA Disability Benefits.
Reviewed by the CalculatorHub team, edited by James Graham, 15 June 2026. See our methodology.