? How Much Property Is Insured for
The declarations show the policy limit, also known as the limit of coverage, limit of liability, or limit of insurance.
These limits represent the maximum amount the insurance company will pay for a loss.
Within this framework, the principle of indemnity and applicable policy conditions are used to determine the exact reimbursement in the event of a loss.
For certain hard to value items, the insurance company will issue a valued or agreed amount contract.
Valued contracts are written for a specified amount, and they list the value of the insured property as agreed to by both the insured and the insurer at policy inception.
If the item is damaged, this is the amount that will be used to value the loss.
This avoids the difficulty of trying to determine the value of such property after it has already been damaged or destroyed.
An example of property frequently covered on a valued basis is art work.