Expected Loss
Calculator
Results
- Expected loss per unit
- 1,000
- Expected annual losses
- 150,000
- Expected claim count
- 6
Insurance and risk results
| Expected loss per unit | 1,000 |
| Expected annual losses | 150,000 |
| Expected claim count | 6 |
formula-map diagram
- Expected loss per unit
- 1,000
- Expected annual losses
- 150,000
- Expected claim count
- 6
Coverage and risk relationship
Formula
Expected loss = probability × severity (× exposure units)= 1000
Note
This is generic arithmetic using the amounts, rates and factors you entered. It is not an insurance quote, a policy interpretation, or financial advice. No insurer rate, jurisdiction rule, statutory limit or policy wording is built in. Real premiums and payouts depend on underwriting, your policy's exact terms and exclusions, and applicable regulation; confirm with your insurer or a licensed professional.
More in Insurance and risk
See all →Frequently asked questions
What does 'expected loss' mean in insurance pricing?+
It's the statistically predicted average cost of claims, calculated as the probability of a loss event occurring multiplied by its expected severity (dollar amount), summed across all possible scenarios — the foundational number insurers use before adding expenses and profit margin to set premiums.
Why doesn't my actual claim match the expected loss figure?+
Expected loss is an average across a large pool of similar risks, not a prediction for any single policyholder; any individual year's outcome will differ from the average, sometimes by a lot, especially in low-frequency, high-severity risks.
How is probability of loss determined for the calculation?+
It's typically based on historical claims frequency data for similar risks (same property type, location, demographic, or industry), often refined with actuarial models that adjust for specific risk factors unique to the insured.
Why does severity matter as much as probability?+
A rare event with catastrophic severity (like a total fire loss) can have the same or higher expected loss as a common event with minor severity (like small water damage claims), since expected loss multiplies the two together rather than looking at either alone.
Is expected loss the same as the premium I'd pay?+
No, expected loss is only the pure risk cost; insurers add loadings for administrative expenses, profit margin, and a risk margin for uncertainty on top of the expected loss to arrive at the actual premium charged.