Underinsured
Definition
A condition where your insurance coverage limits are insufficient to fully cover a loss. Being underinsured is different from being uninsured — you have coverage, but not enough. This commonly occurs when dwelling coverage does not keep pace with construction costs, or when liability limits are too low for your asset exposure.
When This Matters
Your home would cost $450,000 to rebuild, but your dwelling coverage is only $350,000. When a fire destroys it, you are underinsured by $100,000.
Related Terms
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