It is the legal right, life, limb, interest, liability or item of property a person, group of people or a company has to be insured.
Under Insurance
Under Insurance is when the sum insured for property insurance is less than the actual value of the subject of insurance (such as a house, car or possessions).
As insurers would not have received the full premium for the risk they are insuring, the consequences of under-insurance are significant.
Most policies include a condition in the wording which says that in the event of under-insurance, insurers have the right to reduce any valid claim paid by the same amount the property is under-insured by.