Three-Fourths Value Clause

Published: | Updated: April 19, 2016

Definition - What does Three-Fourths Value Clause mean?

The three-fourths value clause was found in some property insurance contracts. It states that the insurance company would not be liable to pay more than three-fourths, or 75 percent, of the cash value of the property. For example, if your house worth $100,000 burns down, an insurance policy with this clause would offer coverage up to $75,000 for a claim.

Insuranceopedia explains Three-Fourths Value Clause

Insurance companies used the three-fourths value clause as a way to encourage policyholders to be more careful with their property. The idea was that since policyholders would have to pay a sizable amount after a loss, they would be more careful with their property and prevent careless damage. Policyholders who accepted this clause were able to get coverage at a lower rate.

Today, insurance companies rarely use the three-fourths value clause. Instead, policyholders can get a similar deal by accepting a policy with less coverage or with more out-of-pocket fees like deductibles and coinsurance.

How Well Do You Know Your Life Insurance?

The more you know about life insurance, the better prepared you are to find the best coverage for you.

Whether you're just starting to look into life insurance coverage or you've carried a policy for years, there's always something to learn.

Share this:

Connect with us

Email Newsletter

Join thousands receiving the latest content and insights on the insurance industry.