diff --git a/inline-diff.el b/inline-diff.el
index 9d1ab54..fb9da3a 100644
--- a/inline-diff.el
+++ b/inline-diff.el
@@ -52,8 +52,11 @@ If nil, the additions will be displayed via empty overlays."
   "Whether to refine diffs with finer changes."
   :type 'boolean)
 
-(defcustom inline-diff-refine-similarity 0.5
-  "The similarity threshold for refining diffs."
+(defcustom inline-diff-refine-similarity 0.7
+  "The similarity threshold for refining diffs, between 0.0 and 1.0.
+
+This is the proportion of characters that must remain in common between
+the old and new versions in order for refinement highlighting to be shown."
   :type 'number)
 
 ;;;; Faces
@@ -509,8 +512,9 @@ SO-FAR is a list of overlays already seen."
                                     (mapconcat #'cdr (cdar last-op-ov) nil))))
                (new-chars (vconcat (inline-diff--char-positions
                                     (mapconcat #'cdr (cdar op-ov) nil))))
+               (max-length (max (length old-chars) (length new-chars)))
                (char-diff (inline-diff--myers-diff old-chars new-chars :test #'eql :key #'cdr))
-               deletions insertions del-ins-unique-points)
+               deletions insertions)
           (dolist (op char-diff)
             (pcase (car op)
               ('delete
@@ -518,13 +522,15 @@ SO-FAR is a list of overlays already seen."
               ('insert
                (setq insertions (nconc insertions (cdr op))))))
           (when (and deletions
-                     (<= (length deletions) (* inline-diff-refine-similarity (length old-chars))))
+                     (<= (length deletions) (* (- 1 inline-diff-refine-similarity) (length old-chars)))
+                     (<= (* inline-diff-refine-similarity max-length) (length old-chars)))
             (inline-diff--show-refinement
              (cdr last-op-ov)
              (inline-diff--seq-ranges deletions #'car)
              'inline-diff-refine-removed))
           (when (and insertions
-                     (<= (length insertions) (* inline-diff-refine-similarity (length new-chars))))
+                     (<= (length insertions) (* (- 1 inline-diff-refine-similarity) (length new-chars)))
+                     (<= (* inline-diff-refine-similarity max-length) (length new-chars)))
             (inline-diff--show-refinement
              (cdr op-ov)
              (inline-diff--seq-ranges insertions #'car)