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It is a fairly common practice in companies that do not have technical managers (http://en.wikipedia.org/wiki/Code_coverage). Basically it is useful to measure the coverage of existing conditions (and insure stability) but clearly lacks the ability to test the conditions you forgot to write. Kind of defeats half of the purpose.

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Companies also track and report is when required by external entities such as the FAA for safety critical systems.

I think it goes deeper than "the conditions you forgot to write" although that's part of it. A developer's test suite tends to make assumptions and these are the same assumptions that exist in the production code. If your assumptions about usage, or input, or edge cases are poor then the tests you write will be poor too and in that case 100% coverage isn't worth much. Big reason I'm a fan of things like QuickCheck in Haskell.

A quick Google suggests the FAA uses some version of decision coverage (i.e. for each branch in your code, what percentage were taken during testing), not simple line coverage.

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