Valued Marine Policy
What Is a Valued Marine Policy?
A valued marine policy is a type of marine insurance coverage that puts a specific value on the insured property, for example, the body or cargo of a shipping vessel, prior to a claim being made. In the event of a loss, a valued marine policy will pay a predetermined, pre-decided amount — gave, of course, that there are no hints of fraud.
A valued marine policy contrasts from an unvalued, or open, marine policy. Under that type of coverage, the value of the property would should be proven subsequent to a loss through the production of invoices, gauges, and other evidence.
How a Valued Marine Policy Works
Insurance furnishes people or an entity with financial protection against a predefined type of loss in exchange for payment of a fee, known as a premium. Guaranteeing basically anything at a cost, including high stake things, for example, ships and cargo is conceivable.
All marine insurance policies are either valued or unvalued. On account of the former, the monetary value not entirely set in stone and stated in the policy document, hence clarifying any inquiries regarding the value of the reimbursements in case of a total or partial loss to the ships, cargo, and terminals covered under the policy.
These types of plans stay away from debates regarding the value of the insured property. At the point when a marine policy contains the words "valued at" or "so valued," there is generally no reassessment or revaluation vital on the off chance that an insured event or loss were to happen.
Important
A marine insurance policy ought to fall under the valued category in the event that it contains, some place in the contract, the words "valued at" or "so valued."
A valued marine policy pays a fixed amount, no matter what the degree of the damages. For instance, a policy might pay $1,000 per box of lost cargo, whether or not the value of the cargo is actually $500 or $2,000 per box.
Special Considerations
It is important to note that on the off chance that the insured thing devalues in value, it won't influence the amount which can be claimed in the event of a total loss. The equivalent is likewise true assuming the value of the thing appreciates, in which case the insured would not be able to receive any extra damages in view of the increased value of the thing.
The qualification among valued and unvalued policies was first stated in the United Kingdom's Marine Insurance Act of 1906, which has turned into the basis for maritime insurance policies and laws in many countries, including the United States.
The Marine Insurance Act of 1906 states that: for an unvalued policy, the measure of indemnity is the insurable value of the subject-matter insured, so shipowners with valued policies might fare better assuming they make a claim during periods of falling market rates. In such situations, those with unvalued policies might find that any recovery will be just a fraction of what the ship was worth when they took out the policy.
This makes it critical for those protecting ships to acquire policies with the appropriate phrasing, especially since the differentiation among valued and unvalued marine policies has turned into the subject of legal debates in numerous countries.
Highlights
- A valued marine policy is a type of insurance coverage that puts a specific value on marine property prior to a claim being made.
- That means assuming that the insured thing deteriorates in value, it won't influence the amount which can be claimed in the event of a total loss — and vice versa.
- Valued marine policies vary from unvalued marine policies, which just evaluate property value and damages after the policyholder documents a claim.
- In the event of a loss, a valued marine policy will pay a predefined, pre-decided amount.
