Valuation Method
What Does Valuation Method Mean?
A valuation method, in the context of insurance, is the process used by insurance adjusters to calculate the monetary value of losses reported in a claim. It enables the insurance company to assess the validity of the claim and estimate the amount of covered losses or damages.
Insuranceopedia Explains Valuation Method
As part of the valuation process, insurance adjusters determine whether the insured has suffered financial losses, whether the insurance policy covers those losses, the monetary value of the damage or loss, and the estimated cost of repairing or replacing the item in question. For instance, if a policyholder crashes into a tree and files a claim, the adjuster would review the claim, assess the damage, and estimate the repair costs. Once the valuation is established, the claim can be processed.
