https://www.insurerbrain.com/w/index.php?action=history&feed=atom&title=Definition%3AValued_policy 2026-05-02T19:09:08Z Revision history for this page on the wiki MediaWiki 1.43.8 https://www.insurerbrain.com/w/index.php?title=Definition:Valued_policy&diff=10070&oldid=prev 2026-03-11T06:09:07Z

<p>Bot: Creating new article from JSON</p> <p><b>New page</b></p><div>📄 &#039;&#039;&#039;Valued policy&#039;&#039;&#039; is an [[Definition:Insurance policy | insurance contract]] in which the insurer and the [[Definition:Policyholder | policyholder]] agree at [[Definition:Policy inception | inception]] on a fixed dollar amount representing the value of the insured property, and that agreed sum — rather than any post-loss appraisal — becomes the measure of recovery in the event of a [[Definition:Total loss | total loss]]. This stands in contrast to an [[Definition:Open policy | open (or unvalued) policy]], where the loss amount is determined only after a covered event occurs, typically using [[Definition:Actual cash value (ACV) | actual cash value]] or [[Definition:Replacement cost | replacement cost]] calculations.<br /> <br /> 🔧 Valued policies are most commonly encountered in [[Definition:Marine insurance | marine insurance]], [[Definition:Fine art insurance | fine art]] coverage, and [[Definition:Inland marine insurance | inland marine]] lines — contexts where the insured property may be unique, difficult to appraise after a loss, or subject to market fluctuations that make post-loss valuation contentious. Several U.S. states also enforce [[Definition:Valued policy law | valued policy laws]] for [[Definition:Property insurance | real property insurance]], requiring that in the event of a total loss the insurer pay the full [[Definition:Face amount | face amount]] of the policy regardless of the property&#039;s actual market or depreciated value. For [[Definition:Underwriting | underwriters]], this means the agreed value must be carefully vetted at binding — an inflated value exposes the carrier to overpayment, while an understated value leaves the insured inadequately protected and may invite disputes.<br /> <br /> ⚖️ The certainty a valued policy provides to both parties is its chief advantage: the policyholder knows exactly what will be paid for a total loss, and the insurer can set precise [[Definition:Loss reserve | reserves]] and [[Definition:Reinsurance | reinsurance]] limits against that known amount. Disputes over depreciation, obsolescence, or market value are largely eliminated, which streamlines [[Definition:Claims settlement | claims settlement]] and reduces litigation. However, this certainty comes with a trade-off — if the insured property appreciates significantly after the policy is issued, the agreed value may understate the true loss, while appreciation on the insurer&#039;s side means it may pay more than the item was worth at inception. Periodic re-evaluation of stated values, particularly at [[Definition:Policy renewal | renewal]], helps keep the agreed figure aligned with reality.<br /> <br /> &#039;&#039;&#039;Related concepts:&#039;&#039;&#039;<br /> {{Div col|colwidth=20em}}<br /> * [[Definition:Valuation clause]]<br /> * [[Definition:Actual cash value (ACV)]]<br /> * [[Definition:Agreed value]]<br /> * [[Definition:Valued policy law]]<br /> * [[Definition:Marine insurance]]<br /> * [[Definition:Total loss]]<br /> {{Div col end}}</div>

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