A more thorough explanation:

Definition: Underinsurance is when an insurance policy only covers a portion of the value of a property, leaving the owner responsible for the remaining amount in the event of damage or loss.

Example: John owns a house worth $500,000, but he only has insurance coverage for $300,000. If his house is damaged in a fire and the repair costs are $400,000, John will have to pay $100,000 out of pocket because his insurance policy only covers up to $300,000.

Explanation: This example illustrates underinsurance because John's insurance policy only covers a portion of the value of his house, leaving him responsible for the remaining amount. In this case, John is underinsured by $200,000, which means he will have to pay that amount out of pocket if his house is damaged or destroyed.