What Is a Valued Marine Policy?
Let me explain what a valued marine policy is—it's a form of marine insurance that sets a fixed value on the insured property, like a ship's hull or its cargo. If you file a claim, you don't have to prove the value again; the policy pays out the agreed amount as long as there's no fraud involved.
This is different from an unvalued or open marine policy, where you'd need to show invoices, estimates, or other evidence to establish the property's value after a loss.
Key Takeaways
- A valued marine policy assigns a specific value to marine property.
- It pays a predetermined amount in the event of a loss.
- Depreciation or appreciation of the item doesn't affect the claim amount for a total loss.
- Unlike unvalued policies, it assesses value upfront rather than after a claim.
How a Valued Marine Policy Works
Insurance gives you or your business financial protection against specific losses in return for a premium payment. You can insure almost anything, including high-value items like ships and cargo.
Marine policies are either valued or unvalued. With a valued one, the monetary value is set in advance and written into the policy, so there's no debate about reimbursement for total or partial losses to ships, cargo, or terminals.
These policies prevent disputes over the insured property's value. If the policy includes phrases like 'valued at' or 'so valued,' you generally won't face reassessment if a loss occurs.
Look for those words in your marine insurance contract—they indicate it's a valued policy.
A valued policy pays a fixed sum no matter the actual damage extent. For instance, it might pay $1,000 per box of lost cargo, even if the cargo's real value is $500 or $2,000 per box.
Special Considerations
Remember, if your insured item depreciates, it won't reduce what you can claim for a total loss. The same applies if the value increases—you can't claim extra based on that appreciation.
The difference between valued and unvalued policies dates back to the UK's Marine Insurance Act of 1906, which forms the foundation for marine insurance laws in many places, including the US.
According to that Act, unvalued policies base indemnity on the insurable value at the time of loss, so if market rates drop, shipowners with unvalued policies might recover far less than the ship's value when insured. Valued policies can protect you better in those cases.
That's why you need to ensure your policy has the right wording, as the valued vs. unvalued distinction often leads to legal fights in various countries.
Policies also typically reference the York Antwerp Rules, which outline costs and liabilities in the maritime sector.
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