Texas All Lines Adjuster Practice Test

Which term describes a property that is inadequately insured against loss?

1. Underinsured

2. Uninsured

3. Overinsured

4. Insufficiently insured

The correct answer is: Underinsured

The term that best describes a property that is inadequately insured against loss is "underinsured." When a property is underinsured, it means that the insurance coverage is less than the value of the property or the potential risk of loss. This can lead to significant financial hardship for the policyholder in the event of a claim, as they may not receive enough compensation to cover their losses fully. Understanding the difference between being underinsured and other terms, such as uninsured or overinsured, is important. An uninsured property has no coverage at all, while an overinsured property has more coverage than is actually needed to cover the value of the property. "Insufficiently insured" might convey a similar idea, but it is not a standard term used in insurance terminology as clearly as "underinsured." Thus, "underinsured" is the most accurate and widely recognized term for describing a property with inadequate insurance coverage.