Underinsurance

Definition

  • A situation that arises when an individual or entity purchases an insurance policy that does not cover the full value of an asset. For example, if a home is worth $200,000 and the homeowner purchases a policy that only covers damages up to $150,000, then the homeowner would be underinsured in the amount of $50,000.

Synonyms
partial insurance, insufficient insurance

Related Terms and Acronyms

  • Claims Adjuster Definition,
    • An individual who ascertains the insurer's liability after an insurance claim has been made.
  • First Loss Insurance Policy Definition,
    • An insurance policy where the policyholder under-insures their assets and will only receive partial coverage in the event of a loss.
  • Insurable Interest Definition,
    • Something of sufficient worth and benefit that an individual or entity would have reason to insure against its lost.
  • Insurance Claim Definition,
    • An application for benefits made by an insurance policyholder after an insured event.
  • Loss Settlement Amount Definition,
    • The percentage of damages an insurer is contractually obligated to pay for after a claim.
  • Underinsured Motorist Coverage Definition,
    • Auto insurance that covers damages when the other driver in a collision is at fault but does not have sufficient insurance coverage.
  • Valuation Definition,
    • The process of finding the worth of an asset or business.
    • The estimation of a property's price value through an appraisal.
  • Value Reporting Form Definition,
    • A form used to keep track of a business's current inventory value.
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