Underinsurance

8 months ago

Insurance Glossary Team

1 minute

Plain English Definition: Having less insurance coverage than needed to fully cover potential losses.

What Underinsurance really means for someone with an insurance policy

Underinsurance occurs when the insurance coverage amount is insufficient to pay for the total costs of a loss or claim, leaving the policyholder responsible for the difference.

Underinsurance Real World Examples

Home insurance that only covers half of the house’s rebuild cost after a fire.
Medical insurance that covers only a portion of a major surgery cost.
Auto insurance that doesn’t cover all damage after an accident.