---
title: "Valued policy: what an agreed value pays | Riskado"
description: "A valued policy fixes the insured value before a loss, so a covered total loss can be paid at the agreed amount, minus the deductible and subject to exclusions."
url: "https://riskado.com/insurance-terms/valued-policy/"
lang: "en"
published: "2026-03-19"
modified: "2026-10-01"
image: "https://riskado.com/og/default.jpg"
alternates:
  es: "https://riskado.com/es/terminos-de-seguros/poliza-de-valor-acordado.md"
---

# Valued policy

Updated Oct 1, 2026

A valued policy is insurance that fixes the insured value before a loss instead of calculating it afterward from the amount of damage. If a covered loss is total, the agreed amount can set the payment, subject to the policy's deductible, exclusions, conditions, and state law. Partial losses may follow a different settlement formula.

Also called: agreed value policy, agreed amount insurance, valued policy law

A valued [policy](https://riskado.com/insurance-terms/policy/) settles the biggest question in a total-loss [claim](https://riskado.com/insurance-terms/claim/) before anything happens: what the property is worth. Instead of arguing over [depreciation](https://riskado.com/insurance-terms/depreciation/) or [market value](https://riskado.com/insurance-terms/fair-market-value/) after a fire or a wreck, you and the [insurer](https://riskado.com/insurance-terms/insurer/) agree on a figure up front, and a covered total loss is paid on that figure. You see this most often with classic cars, boats, fine art, jewelry, and some buildings. The label alone does not settle it, though, because "valued," "[agreed value](https://riskado.com/insurance-terms/classic-car-insurance/)," and "stated amount" can carry different payment rules, and the policy's own valuation wording controls.

## How a valued policy pays a total loss

The [NAIC glossary (opens in a new tab)](https://content.naic.org/glossary-insurance-terms) defines a valued policy as one whose value is agreed in advance and is not tied to the amount of the insured loss. California writes the rule into law: under [California Insurance Code § 2054 (opens in a new tab)](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=INS&sectionNum=2054), a total loss under a valued policy pays the whole amount insured on your interest in the building or structure, subject to exceptions. This illustration uses round numbers to show the arithmetic.

Illustrative valued policy on a building with a $300,000 agreed value

Hover or tap a row to highlight it.

| Step | Amount |
| --- | --- |
| Agreed insured value | $300,000 |
| Covered total loss | $300,000 |
| Deductible | $2,000 |
| Insurer pays ($300,000 minus $2,000) | $298,000 |
| You absorb (the deductible) | $2,000 |

A covered partial loss of $80,000 on the same building does not trigger the $300,000 figure. It is measured under the policy and applicable law, subject to the limit and the [deductible](https://riskado.com/insurance-terms/deductible/). Section 2054 also carves out exceptions for fraud, an increase in risk without the insurer's consent, multiple policies, and certain other situations, so even a total loss can be paid differently when one applies.

## Valuation methods and what each changes

The valuation clause decides how a claim is measured, and each choice moves the payment and often the [premium](https://riskado.com/insurance-terms/premium/):

- **Actual cash value** generally reflects replacement cost minus depreciation, so older property pays less.
- **Replacement cost** pays to repair or replace without deducting physical depreciation, subject to the limit and any repair or rebuilding requirement.
- **Extended replacement cost** can add a percentage above the dwelling limit when the policy includes it.
- **Guaranteed replacement cost** may give broader protection against rebuilding costs, depending on the wording.
- **Agreed or valued amount** fixes the insured value before the loss.
- **Stated amount** names a figure, but payment may still depend on actual cash value, market value, or the lesser of several amounts, according to [California Department of Insurance licensing objectives (opens in a new tab)](https://www.insurance.ca.gov/0200-industry/0030-seek-pre-lic/upload/PreLicEduObjAU.pdf).

A higher insured value or broader valuation clause can raise the premium because the insurer's possible payment is larger. No valuation clause creates coverage for an excluded cause of loss or for property the policy does not describe.

## Where the term appears

Valued treatment shows up in fire, dwelling, homeowners, commercial property, farm, mobile-home, boat, classic-car, collector-vehicle, fine-art, and jewelry policies. On paper, look at the declarations page, coverage schedule, valuation clause, loss-settlement provision, or an agreed-value or stated-amount [endorsement](https://riskado.com/insurance-terms/endorsement/). It also appears on quotes, binders, renewal documents, valuation reports, appraisals, and claim letters. A lender, marina, or storage facility may ask for proof of the insured value.

The term is less common in renters, condo, health, pet, and life insurance. A life policy has a set death benefit, but that does not make it a valued policy in the property sense, and [liability insurance](https://riskado.com/insurance-terms/liability-insurance/) pays covered damages up to its limits rather than an agreed value of property.

## How Connecticut and New York treat valued policies

Connecticut sets a specific rule for totaled cars rather than a general valued-policy rule for homes. Under [Conn. Gen. Stat. § 38a-353 (opens in a new tab)](https://www.cga.ct.gov/current/pub/chap_700.htm#sec_38a-353), an insurer that declares a vehicle a constructive total loss must use at least the average of retail values from two approved industry sources and give you a detailed calculation and notice of your right to dispute. Under a stated-amount or valued policy, that valuation may need to be adjusted to fit the policy's provisions, according to [Connecticut Insurance Department Bulletin IC-5 (opens in a new tab)](https://portal.ct.gov/cid/department-resources/bulletins/commissioner-bulletins/bulletin-ic-5).

New York requires fire policies to follow the standard fire policy under [Insurance Law § 3404 (opens in a new tab)](https://www.nysenate.gov/legislation/laws/ISC/3404). New York courts recognize a valued policy when the policy states that property is "valued at" a definite amount, and in a total loss that amount can control, as in [Lee v. Hamilton Fire Insurance Co. (opens in a new tab)](https://www.courtlistener.com/opinion/3629819/lee-v-hamilton-fire-insurance/). Total-loss auto settlements follow [Insurance Law § 3412 (opens in a new tab)](https://www.nysenate.gov/legislation/laws/ISC/3412) instead.

## Questions to ask an agent or insurer

1.  Is this policy a valued policy, an agreed-value policy, or a stated-amount policy? The label can decide whether the figure is final or only a limit.
2.  What is the agreed value, and what documents support it? Appraisals, receipts, restoration records, photos, and valuation reports may establish both the amount and the property insured.
3.  Does the agreed amount apply only to a total loss, or to partial losses too? Partial losses may use repair cost, actual cash value, depreciation, or another formula.
4.  Which deductible, exclusions, coinsurance terms, and settlement conditions still apply? An agreed value does not automatically remove any of them.
5.  How is the value reviewed at renewal, and what happens if construction costs, market value, restoration work, or vehicle modifications change? An outdated value can leave you underinsured or spark a dispute after a loss.

## Frequently asked questions

Short answers on stated amounts, personal property, and renewal.

### Is agreed value the same as stated amount?

Not necessarily. Agreed value means you and the insurer settle the value in advance. A stated amount may only name a limit, with payment controlled by actual cash value or a "lesser of" clause, so a stated-amount car can pay less than the figure on the declarations page.

### Does a valued policy cover personal property automatically?

No. A valued-policy statute or endorsement may apply only to named buildings, structures, vehicles, or scheduled items. California's rule addresses your interest in a building or structure, and Arkansas's valued policy law (Ark. Code Ann. § 23-88-101) excludes certain personal property and detached structures.

### Can the agreed value change at renewal?

The renewal documents and policy terms decide whether the amount changes automatically, by endorsement, or through a new valuation. Compare the declarations page and valuation schedule each time the policy renews.

## Related terms