Underinsurance

Underinsurance
Inadequate insurance coverage by the holder of a policy. In the event of a claim, underinsurance may result in economic losses to the policy holder, since the claim would exceed the maximum amount that can be paid out by the insurance policy. While underinsurance may result in lower premiums paid by the policy holder, the loss arising from a claim may far exceed any marginal savings in insurance premiums.

Underinsurance can cause a serious financial crisis, depending on the asset that is insured and the extent of the shortfall in insurance. For example, assume a house and its contents are insured against all risks for $250,000, with a deductible of $20,000. It is subsequently destroyed in a fire, but the cost to replace the house and contents amounts to $350,000. The homeowner will have to make up the difference of $100,000 plus the $20,000 deductible from his or her own resources.


Investment dictionary. . 2012.

Игры ⚽ Поможем написать курсовую

Look at other dictionaries:

  • underinsurance — un·der·in·sur·ance /ˌən dər in shu̇r əns/ n 1: insufficient insurance 2: insurance coverage protecting usu. against uninsured or underinsured motorists by compensating the insured if the tortfeasor s liability policy limits fall short of the… …   Law dictionary

  • underinsurance — underinsured un‧der‧in‧sured [ˌʌndərɪnˈʆʊəd◂ ǁ ˈʆʊrd◂] also under insured adjective INSURANCE 1. if a person is underinsured, the value of the health care for which they are insured is less than they need: • We must focus on ensuring that low… …   Financial and business terms

  • underinsurance — /un deuhr in shoor euhns, sherr /, n. insurance purchased against damage or loss of property in an amount less than its true value, sometimes bought intentionally by the insured with full knowledge of the risk. [UNDER + INSURANCE] * * * …   Universalium

  • underinsurance — noun Inadequate insurance. See Also: underinsure …   Wiktionary

  • underinsurance — n. inadequate insurance, insurance not adequate to recover the full value of what is insured …   English contemporary dictionary

  • underinsurance — | ̷ ̷ ̷ ̷ ̷ ̷| ̷ ̷ ̷ ̷ noun Etymology: under (III) + insurance : insurance in an amount insufficient to cover the possible loss or to satisfy the requirements of a coinsurance clause * * * /un deuhr in shoor euhns, sherr /, n. insurance purchased …   Useful english dictionary

  • Condition of average — Illustration of the partial payout of Sum Insured against probability of occurrence Condition of average (also called underinsurance[1] in the U.S., or principal of average[2], su …   Wikipedia

  • underinsured — un‧der‧in‧sured [ˌʌndərɪnˈʆʊəd◂ ǁ ˈʆʊrd◂] also under insured adjective INSURANCE 1. if a person is underinsured, the value of the health care for which they are insured is less than they need: • We must focus on ensuring that low income,… …   Financial and business terms

  • Health care in the United States — ] Current estimates put U.S. health care spending at approximately 15.2% of GDP, second only to the tiny Marshall Islands among all United Nations member nations. The health share of GDP is expected to continue its historical upward trend,… …   Wikipedia

  • United States — This article is about the United States of America. For other uses of terms redirecting here, see US (disambiguation), USA (disambiguation), and United States (disambiguation). United States of America …   Wikipedia

Share the article and excerpts

Direct link
… Do a right-click on the link above
and select “Copy Link”