What Does Broad Evidence Rule Mean?
The broad evidence rule is a rule that insurance companies are often obligated to follow for determining the value of losses sustained by policyholders. This rule states that no single, fixed means will be used for determining the value of items lost, but instead, the most accurate means available will be used.
Insuranceopedia Explains Broad Evidence Rule
The broad evidence rule is an alternative to determining value by the actual cash value. Actual cash value is determined by replacement cost minus depreciation. Although actual cash value can be useful in many situations, it does not always accurately identify the value of the loss. This is because it does not take into consideration factors such as tax value, age of property and possible profits that might have been built up by the asset over a period of time.