Coverage Gap
Definition
A situation where a policyholder lacks coverage for a specific risk or peril. Coverage gaps can occur because of policy exclusions, inadequate limits, failure to add endorsements, or simply not having the right type of policy. Identifying and closing coverage gaps before a loss occurs is one of the most important things a policyholder can do.
When This Matters
You have homeowners insurance but no flood insurance, and you live in a moderate flood risk area. This is a coverage gap that could result in catastrophic uninsured losses.
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