Valued Policy
What Does Valued Policy Mean?
A valued policy is a type of property insurance where a predetermined value is set to cover total losses. With this policy, the actual value of the insured items or property at the time of loss is irrelevant, as the coverage amount has already been established.
Insuranceopedia Explains Valued Policy
The value of certain types of property, such as artwork, jewelry, or precious metals, can fluctuate significantly over time due to market conditions. The appeal of a valued policy lies in its simplicity—policyholders do not need to prove the extent of their loss and will receive a predetermined payout for a covered loss, regardless of the property’s current value. However, this also means policyholders risk receiving less than the item’s appreciated value. Despite this drawback, a valued policy provides an alternative to insurance contracts like actual cash value policies, which only cover the item’s current market value.
