Insurance Coverage

AAA

DEFINITION of 'Insurance Coverage'

The amount of risk or liability covered for an individual or entity by way of insurance services. Insurance coverage is issued by an insurer in the event of an unforeseen or unwanted occurrences. There are general different types of insurance coverage, such as auto or life or more exotic forms such as hole-in-one insurance.

INVESTOPEDIA EXPLAINS 'Insurance Coverage'

The amount of insurance coverage an individual or entity will have is determined by multiple factors, however when boiled down it comes down to the probability of the insured event actually occurring. For example, most insurers will charge higher premiums for young male drivers as they deem the probability of them being involved in accident to be higher than say, a middle-aged married man with years of driving experience.

VIDEO

Loading the player...
RELATED TERMS
  1. Underinsurance

    Inadequate insurance coverage by the holder of a policy. In the ...
  2. Life Insurance

    A protection against the loss of income that would result if ...
  3. Reinsurance

    The practice of insurers transferring portions of risk portfolios ...
  4. Insurance

    A contract (policy) in which an individual or entity receives ...
  5. Premium

    1. The total cost of an option. 2. The difference between the ...
  6. Value Of Risk (VOR)

    The financial benefit that a risk-taking activity will bring ...
RELATED FAQS
  1. How does the combined ratio measure the financial health of insurance companies?

    The combined ratio measures the profitability of an insurance company by examining its earned premium from its policyholders ... Read Full Answer >>
  2. What is the difference between adverse selection and moral hazard?

    In economics, moral hazard and adverse selection are two possible consequences of asymmetric information or ineffective information ... Read Full Answer >>
  3. Which markets are most prone to market failure from adverse selection?

    Adverse selection causes market failure -- a sub-optimal level of beneficial trades -- whenever material information cannot ... Read Full Answer >>
  4. How does adverse selection affect insurance premiums?

    Any limits on an insurance provider's ability to appropriately price risk – to economize on important information – might ... Read Full Answer >>
  5. How does adverse selection contribute to market failure?

    Adverse selection is perhaps the most academically cited example of market failure in a laissez-faire economy. The problem ... Read Full Answer >>
  6. If both the primary and contingent beneficiaries are unavailable, what happens to ...

    One of the most common mistakes in estate planning is not keeping beneficiary designations up to date on life insurance policies ... Read Full Answer >>
Related Articles
  1. Insurance

    15 Insurance Policies You Don't Need

    Learn how to save money by saying "no" to unnecessary coverage.
  2. Options & Futures

    Top Tips For Cheaper, Better Car Insurance

    Accident, theft, vandalism - make sure your coverage will protect you when you need it most.
  3. Insurance

    Life Insurance: Putting A Price On Peace Of Mind

    Would your death leave loved ones financially stranded? Find out how to ease your mind and keep them protected.
  4. Economics

    What is Adverse Selection?

    Adverse selection occurs when one party in a transaction has more information than the other, especially in insurance and finance-related activities.
  5. Insurance

    How to Use a Waiver of Subrogation

    A waiver of subrogation means that a party to a contract waives the right to allow someone (usually an insurance company) to sue the other party to the contract in case of a loss.
  6. Insurance

    How the Affordable Care Act Changed Insurance

    6 Ways Obamacare Impacts the Health Insurance Marketplace
  7. Insurance

    Why You Don’t Need Mortgage Protection Life Insurance

    Mortgage protection life insurance sounds great in concept - a guarantee that your mortgage will be paid off if you die unexpectedly. But take a hard look at what you get before choosing it.
  8. Home & Auto

    The Beginner's Guide To Homeowners' Insurance

    Discover everything new homeowners need to know before they sign on the dotted line.
  9. Stock Analysis

    How Warren Buffett made Berkshire Hathaway a World-beater

    It would almost be easier to list the industry sectors in which Omaha-based Berkshire Hathaway Inc. (NYSE:BRK.A) doesn’t turn gargantuan profits.
  10. Entrepreneurship

    Want To Sell Life Insurance? Read This First

    Looking for a career that offers big financial upside and the lure of self-employment? Insurance sales could well be for you.

You May Also Like

Hot Definitions
  1. Adverse Selection

    1. The tendency of those in dangerous jobs or high risk lifestyles to get life insurance. 2. A situation where sellers have ...
  2. Wash Trading

    The process of buying shares of a company through one broker while selling shares through a different broker. Wash trading ...
  3. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  4. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  5. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  6. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
Trading Center