Shmoop Finance

Loss settlement amounts are, simply put, the amount the insurance company pays when there is a loss (a.k.a. claim).

For a homeowners policy, this amount can be decided using replacement cost or actual cash value. So if a tree falls on your garage and crushes everything in it, the insurance company could total the items inside using the amount it would cost to replace them, or how much you could have gotten had you sold the stuff (you know, before the tree fell on the garage). The roof and carpentry are, say, $25k; the crap inside, say, $12k; losses on the home itself, nights you have to stay in a hotel, etc., $2k. The total here is $39k. Maybe there's a $5k deductible, so the total loss settlement amount then? $34k.

Next time, keep that tree trimmed.