Insurance company's extremely reduced (5)
I believe the answer is:
cover
'insurance' is the definition.
(thesaurus)
'company's extremely reduced' is the wordplay.
'company' becomes 'co' (abbreviation).
'extremely' becomes 'very' (I've seen this before).
'reduced' means to remove the last letter.
'very' with its last letter taken off is 'ver'.
'co'+'ver'='COVER'
(Other definitions for cover that I've seen before include "Enshroud" , "Overlay" , "the point of cricket" , "Encompass" , "Conceal, screen" .)