Underoverforsikring

Underoverforsikring, often translated as over-under insurance, is a concept related to insurance policies and the potential for discrepancies between the insured value of an asset and its actual market value at the time of a claim. This situation can arise in several scenarios. One instance is underinsurance, where the sum insured is less than the actual replacement cost of the asset. If a total loss occurs, the policyholder would not receive enough to fully replace the item. Conversely, overinsurance happens when the sum insured is significantly higher than the actual value of the asset. In such cases, insurers typically will not pay out more than the actual loss incurred, even if the insured amount is higher. This practice is intended to prevent fraudulent claims and maintain the principle of indemnity, where insurance aims to restore the insured to their pre-loss financial position, not to provide a profit. Insurers may use various methods to assess asset values and ensure appropriate coverage levels. Policyholders are generally advised to regularly review their insured amounts to reflect current market values and avoid potential financial shortfalls or overpayments.