Question

Definition of under-insured with example. (25m)

Answer 1

Underinsured will mean that when the individual will be having insufficient insurance that will be making him responsible for large part of loss of the insurance and it will also lead to financial hardship because he has purchased an insurance against the damage and loss of property in an amount which will be less than the fair value which can be sometimes bought intentionally even with the full knowledge of the risk in order to cut down on the expenses.

In this case, the individual will be having insufficient coverage of the risk.

For example, if the insurance has been taken by the individual and he is responsible for a larger part of the health insurance loss, like he has taken insurance policy in which he is responsible for 70% of the loss and insurance company is only responsible for 30% of the loss and it is a type of under insurance.