Adequacy of Coverage


  • Adequacy of coverage is a measure of how well one's insurance policy(ies) cover property or assets from potential losses. While having inadequate coverage exposes an individual to a certain amount of risk, ensuring complete coverage can prove to be exceedingly expensive due to higher insurance premiums. When determining the adequacy of an individual's coverage, one need consider the probability of risk, the monetary value of the assets, the individual's ability or inability to weather losses and the amount an individual is willing or able to pay in premiums and deductibles.

suitable coverage, acceptable coverage, appropriate insurance

Related Terms and Acronyms

  • Insurable Interest Definition,
    • Something of sufficient worth and benefit that an individual or entity would have reason to insure against its lost.
  • Self Insurance Definition,
    • Setting aside money or assets for a potential future loss.
  • Utilization Definition,
    • How frequently a policyholder makes use of their insurance policy.
  • Valuation Clause Definition,
    • A clause in an insurance contract that states how much an insurer is willing to pay for an asset after an insured event.
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