Valuation Of Loss

What Does Valuation Of Loss Mean?

A valuation of loss is the process of determining the monetary value of property loss. After a policyholder files a claim, this valuation helps insurers decide the appropriate compensation for repairing or replacing the damaged property, subject to the limits of the policy.

Insuranceopedia Explains Valuation Of Loss

Once the insurer confirms that the policyholder has suffered a valid loss covered under the policy, the valuation of loss may be determined based on one of the following:

• A fair value mutually agreed upon by the insurer and the insured.
• The pre-loss value of the property, irrespective of depreciation.
• A specific amount listed in the property insurance policy.
• The cost of replacing or repairing the property to a condition similar to its original state.