Underforsikret
Underforsikret, or underinsured, describes a situation where the value of an insured item or risk is greater than the amount of insurance coverage allocated. In practice this means the policy does not fully transfer the financial risk to the insurer, and a loss can leave the insured with uncovered costs.
The term is most commonly used in property and casualty insurance, such as home or business property.
Causes of underforsikret include outdated valuations, rising rebuild or replacement costs, and choosing a lower coverage
Consequences can be significant. Underinsurance can lead to higher out-of-pocket costs after a loss, delayed rebuilding,
To avoid underforsikret, policyholders should regularly reassess and adjust coverage to reflect current replacement costs and