Wedding Insurance Calculator

What this calculator works out

This is an expected-value calculation applied to a wedding insurance policy. It multiplies the budget by the share the policy covers to get the payout a claim would produce, multiplies that by the probability entered, and subtracts the premium. The figure that comes back is the average outcome across many repetitions of the same bet, which is a narrow question and worth being precise about. OpenStax's Introductory Statistics sets out how an expected value is defined and what it does and does not describe.

The tool takes no position on whether a policy is worth buying. It reports one number and the break-even probability behind it; the decision rests on things the arithmetic cannot see.

A worked example

Take a 30,000 budget, a 3% cancellation probability, a 150 premium and 100% coverage. The covered amount is 30,000, the expected payout is 900, and the expected value is 750.00. The break-even probability is 0.50%, meaning the premium equals the expected payout at that probability.

Drop the probability to 1% and the expected value falls to 150; hold the premium at 900 instead and it sits at exactly zero, which the tool labels Break-Even rather than a gain or a loss. Halve the coverage to 50% and the expected value becomes 300, because the payout halves while the premium does not.

What moves the number most

Three of the four inputs move the expected payout and one moves only the cost. Budget, coverage percentage and probability all multiply together, so a 1% change in any of them shifts the expected payout by the same 1%; the premium then subtracts unchanged. That is why the expected value is more sensitive to the premium than the raw figures suggest at low probabilities: at 1% on a 30,000 budget the whole expected payout is 300, so a premium moving by 100 moves the result by a third of it.

Equal proportional moves matter equally, but equal absolute moves do not, because the four inputs sit on entirely different scales. A percentage point added to a 3% probability is a third of that input and lifts the expected value from 750 to 1,050. A percentage point added to a 30,000 budget is nothing at all. That is worth holding in mind when comparing how far each figure might plausibly move rather than how far it could be nudged.

The break-even probability is the more portable of the two outputs, because it does not depend on the probability guess at all. It is premium divided by covered amount, so at 150 against 30,000 it is 0.50%: above that probability the expected value is positive, below it negative. Comparing that figure against a probability estimate is the same comparison the expected value makes, stated in a way that separates the policy's terms from the guess.

The formula behind this

Covered amount = budget x coverage% / 100. Expected payout = covered amount x probability% / 100. Expected value = expected payout − premium. Break-even probability = premium / covered amount, as a percentage. Nothing compounds and no timing is modelled; every figure is a single period.

What an expected value leaves out

An expected value is an average, and an average says nothing about the spread around it. Insurance exists because the two outcomes here are wildly asymmetric: one is losing the premium, the other is losing a substantial share of the budget. A single wedding happens once, so the average across many repetitions is not the quantity being experienced.

The calculation also assumes cancellation is the only trigger, that a claim pays the full covered amount, and that the probability entered is correct. Real policies carry exclusions, excesses, partial settlements and disputes, none of which appear here. The probability is the weakest input of the four, because it is an estimate rather than a quoted figure, which is why the break-even probability is reported alongside. Supervisory expectations for how insurers are run differ by jurisdiction; the International Association of Insurance Supervisors publishes the standards national regulators work from.