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Simple English definitions for legal terms
valued policy
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A quick definition of valued policy:
Valued policy is a type of insurance policy that sets a fixed amount to be paid out in case of loss. This amount is agreed upon in the contract and is used to determine the recovery in case of partial loss. It is different from an unvalued policy, which requires proof of the property's worth upon loss. Other types of insurance policies include basic-form policy, which offers limited coverage against loss, and multiperil policy, which covers several types of losses. Insurance rating is the process by which an insurer arrives at a policy premium for a particular risk. Insurance Services Office is a nonprofit organization that provides analytical and decision-support services and tools to the insurance industry.A more thorough explanation:
A valued policy is a type of insurance policy that sets a fixed amount to be paid out in case of loss. This value is agreed upon when the policy is created and is used to determine the payout for partial or total loss. For example, if a valued policy for a car is set at $10,000 and the car is stolen, the policyholder will receive $10,000 as compensation.
Other types of insurance policies include:
- Accident policy: Covers loss resulting from accidental bodily injuries
- Homeowner's policy: Covers loss from fire, water, burglary, and negligence
- Group policy: Covers multiple insureds under a group-insurance plan
- Umbrella policy: Covers losses that exceed the limits of liability provided by other policies
These examples illustrate the different types of insurance policies available and the specific risks they cover. It is important to carefully consider the type of policy needed and the coverage it provides before purchasing insurance.