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Simple English definitions for legal terms
open policy
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A quick definition of open policy:
An open policy is a type of insurance policy that does not state the value of the insured property. Instead, the value must be proven in case of loss. This is different from a valued policy, which sets a fixed amount to be paid out in case of loss. Open policies are also sometimes called unvalued policies. Insurance policies are contracts that protect against loss or damage, and can cover a wide range of risks and situations.A more thorough explanation:
An open policy is a type of insurance policy that does not state the value of the insured property. Instead, upon loss, the policyholder must provide proof of the property's worth. This type of policy is also known as an unvalued policy.
- A jewelry store owner purchases an open policy to insure their inventory. If a theft occurs, the owner must provide proof of the value of the stolen items to receive compensation.
- A shipping company purchases an open policy to insure their cargo. If a shipment is lost at sea, the company must provide proof of the value of the lost goods to receive compensation.
These examples illustrate how an open policy requires the policyholder to provide proof of the value of the insured property in the event of a loss. Without this proof, the policyholder may not receive full compensation for their losses.