What term describes the division of risk between the insurer and the insured based on the policy amount and actual property value?

The correct term that describes the division of risk between the insurer and the insured based on the policy amount and actual property value is co-insurance. Co-insurance refers to a provision in property insurance policies that requires the insured to maintain a certain level of coverage in relation to the value of the property. If the insured amount is less than the required percentage of the property's value (often 80%, 90%, or 100%), the insured may not receive full compensation in the event of a claim.

This mechanism encourages policyholders to insure their property to an adequate level in order to share the risk fairly with the insurer. By doing so, both parties have a vested interest in properly assessing the value of the asset and maintaining an appropriate amount of coverage.

Underinsurance refers to situations where a policyholder does not have enough coverage to fully protect their property, which is a related but distinct concept. Full coverage typically suggests comprehensive coverage for all risks, which does not directly relate to the specific division of risk. A risk waiver is generally a clause that exempts the insurer from liability under certain conditions, and it does not involve the mechanism of sharing risk based on coverage amounts.