Adequacy of coverage

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.