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, since 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. Valued policies are often arranged through a personal property floater, which lets homeowners schedule specific high-value items at agreed amounts rather than rely on the standard contents limit. 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. How an insurer handles agreed-value claims and which items qualify for scheduling are practical differences worth checking when comparing top-rated homeowners insurance companies.