Inadequate insurance coverage held by a policy holder is known as

insurance
underinsurance
max insurance
premium

The correct answer is B. Underinsurance.

Underinsurance is a situation where the amount of insurance coverage a policyholder holds is not enough to cover the full cost of a loss. This can happen if the policyholder underestimates the value of their assets or if they choose a lower coverage limit to save money on premiums.

Underinsurance can have serious consequences for policyholders. If they suffer a loss that is larger than their coverage limit, they will have to pay the remaining amount out of their own pocket. This can be financially devastating, especially if the loss is large.

Policyholders should always make sure that they have enough insurance coverage to protect themselves from financial loss. They should review their coverage limits regularly and make sure that they are still adequate.

Here is a brief explanation of each option:

  • Option A: Insurance is a contract between an insurer and an insured in which the insurer agrees to pay the insured for losses that are covered by the policy.
  • Option B: Underinsurance is a situation where the amount of insurance coverage a policyholder holds is not enough to cover the full cost of a loss.
  • Option C: Max insurance is not a term that is used in the insurance industry.
  • Option D: Premium is the amount of money that a policyholder pays to an insurer for insurance coverage.
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