Adequacy of coverage

Adequacy of coverage refers to whether insurance or hedging has been used to provide a sufficient level of loss protection for an asset. For example, a business owner takes out flood insurance to provide coverage for his business. Adequacy of coverage involves measuring the extent to which the insurance coverage covers the value of the business. This is not a quantitative measurement, for the adequacy level depends on the ability of the individual or business to absorb losses, as well as the frequency of expected losses.

Related Courses

Business Insurance Fundamentals 
Enterprise Risk Management