Valuation of Loss

Definition - What does Valuation of Loss mean?

A valuation of loss refers to the process of establishing a monetary value to property loss. After a policyholder files a claim, the valuation helps insurers determine the appropriate compensation to repair or replace damaged property within the limits of the policy.

Insuranceopedia explains Valuation of Loss

After the insurer has determined the policyholder suffered a true loss covered in the policy, the figure for a valuation of loss may be based on one of the following:

  • A fair value both the insurer and insured agree to
  • The pre-loss value of the property, regardless of depreciation
  • A listed amount in the property insurance policy
  • The cost of replacing or repairing the property to a state similar to the original
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