Adequacy of coverage

(redirected from Coverage Adequacy)

Adequacy of coverage

A test that measures the extent to which the value of an asset is protected from potential loss either through insurance or hedging.

Adequacy of Coverage

The extent to which an asset or investment is protected from loss by insurance or hedging. For example, if one owns a house, there is the risk that it could burn down. Adequacy of coverage measures the extent to which the insurance benefit covers the value of the house.
References in periodicals archive ?
Additionally, life insurance coverage adequacy has declined, according to the release: "In 2010, insured households had coverage to replace their income for 3.5 years.
Coverage Adequacy: The rating is sensitive to shifts in cyclical pledged revenue declines that would adversely affect anticipated coverage levels.
* For commercial lines: The best approach is to review the true business impact of a catastrophe, operational considerations, technology coverages, business interruption coverage adequacy, flood coverages, deductibles and property value coverages.
While it would be difficult to design a grand solution that addresses all catastrophe risk issues, there are many important steps that are supported by the industry and legislators, such as improved building codes and building code enforcement and education around coverage adequacy, that can help policyholders prepare in advance of a catastrophe event and recover when a natural catastrophe does strike.
Instead, concentrate on the broader issues of coverage adequacy. Your board is responsible for making certain that insurance protects your organization from losses that, based on the nature and scale of association operations, are reasonably foreseeable.
Coverage Adequacy: The rating is based on the continuation of sound coverage and limited new issuance plans.