Okuzeka
Insurance vocabulary · Coverage & Exclusions

Underinsurance

Meaning in insurance, with examples

nounCommon term

In insurance, underinsurance means: A situation where the sum insured is lower than the real value of the property, so the insurer may pay only part of a loss.

In Turkish: eksik sigorta

How it is used

Common after inflation or renovations. Many policies apply a proportional rule, called 'average' in the UK: if property is insured for 60 percent of its value, only 60 percent of the loss is paid. The adjective is 'underinsured'.

Example sentences

  1. Because of underinsurance, the company received only half of the repair cost.

  2. Underinsurance is common because many owners never update the sum insured.

Common collocations

  • risk of underinsurance
  • avoid underinsurance
  • be underinsured
  • apply average
  • sum insuredThe maximum amount an insurance company will pay under a policy, usually based on the value of the property or the amount chosen for a life policy.
  • indemnityPayment that puts the insured back in the same financial position as before the loss, no better and no worse; also the principle behind such payment.
  • property insuranceInsurance that covers buildings, equipment, stock and other physical assets against damage or loss from events such as fire, flood, storm and theft.
  • policy limitThe highest amount an insurance company will pay, either for one claim, for one type of cost or for all claims during the policy period.

More terms: Coverage & Exclusions

Practise with graded reading

Reading at the right level is the fastest way to make new words stick. Pick free English books by level:

This page explains English vocabulary for learners. It is not financial advice.