Which of the following best describes a policyholder's exposure to losses?

A policyholder's exposure to losses refers to the potential financial loss they may face due to unforeseen events, such as accidents, natural disasters, or other insurable risks. The term "coverage gap" specifically highlights the areas where the insurance coverage may be insufficient to fully protect against these potential losses. In other words, a coverage gap indicates that there are certain risks or amounts of loss that are not covered by an insurance policy, leaving the policyholder exposed to those losses.

This understanding is essential in insurance, as identifying and addressing coverage gaps is critical for policyholders seeking comprehensive protection. They need to be aware of what is not covered by their policy to make informed decisions about coverage and risk management.

The other terms like insurance limit and coverage cap refer to the maximum amount the policy will pay for a covered loss, while risk assessment involves evaluating the risks associated with a particular situation or policy. However, neither of these indicates an absence of coverage in the same way that a coverage gap does. Thus, the choice that best reflects a policyholder's potential vulnerability to loss due to insufficient coverage is the coverage gap.