# Valued Marine Policy: What It Is and How It Works

![Valued Marine Policy](https://www.investopedia.com/thmb/AROg_AiUCz2UFh74VxCH3OUAxhE=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/valued-marine-policy_final-9afcdfc6c2e74984973059246d078d49.png)

*Establishing a fixed value helps avoid potential disputes over the actual value of the property if a loss occurs. — Investopedia / Laura Porter*

> **Definition**
>
> A valued marine policy is a type of marine insurance that pays out a pre-determined amount if a covered loss occurs.

## What Is a Valued Marine Policy?

A valued marine policy is a type of marine [insurance coverage](https://www.investopedia.com/terms/i/insurance-coverage.asp) that places a fixed value on the insured property, such as the hull or cargo of a shipping vessel. When a claim is filed, there is no need to further verify the value of the insured property. In the event of a loss, a valued marine policy will pay the pre-determined amount_,_ provided that there are no traces of fraud.

A valued marine policy differs from an unvalued, or open, marine policy. Under that type of coverage, the value of the property would need to be proven after a loss through the production of [invoices](https://www.investopedia.com/terms/i/invoice.asp), estimates, and other evidence.

### Key Takeaways

*   A valued marine policy is a type of insurance coverage that places a specific value on marine property.
*   In the event of a loss, a valued marine policy will pay a specified, pre-determined amount.
*   That means if the insured item depreciates in value, it will not affect the amount which can be claimed in the event of a total loss—and vice versa.
*   Valued marine policies differ from unvalued marine policies, which only assess property value and damages after the policyholder files a claim.

## How a Valued Marine Policy Works

[Insurance](https://www.investopedia.com/terms/i/insurance.asp) provides individuals or an entity with financial protection against a specified type of loss in exchange for payment of a fee, known as a [premium](https://www.investopedia.com/terms/i/insurance-premium.asp). It is possible to insure pretty much anything for a price, including high stake items such as ships and cargo.

All marine insurance policies are either valued or unvalued. In the case of the former, the monetary value is pre-determined and stated in the policy document, therefore making clear any questions about the value of the [reimbursements](https://www.investopedia.com/terms/r/reimbursement.asp) in case of a [total](https://www.investopedia.com/terms/a/actual-total-loss.asp) or partial loss to the ships, cargo, and terminals covered under the policy. 

These types of plans serve to avoid disputes as to the value of the insured property. When a marine policy contains the words "valued at" or "so valued," there is generally no reassessment or revaluation necessary if an insured event or loss were to occur.

> **Important**
>
> A marine insurance policy should fall under the valued category if it contains, somewhere in the contract, the words "valued at" or "so valued."

A valued marine policy pays a fixed amount, regardless of the extent of the damages. For example, a policy may pay $1,000 per box of lost cargo, regardless of whether the value of the cargo is actually $500 or $2,000 per box. 

## Special Considerations

It is important to note that if the insured item depreciates in value, it will not affect the amount which can be claimed in the event of a total loss. The same is also true if the value of the item appreciates, in which case the insured would be unable to receive any additional damages based on the increased value of the item.

> **Fast Fact**
>
> The distinction between valued and unvalued policies was first stated in the United Kingdom's Marine Insurance Act of 1906, which has become the basis for maritime insurance policies and laws in most countries, including the United States.

The Marine Insurance Act of 1906 states that for an unvalued policy, the measure of [indemnity](https://www.investopedia.com/terms/i/indemnity.asp) is the insurable value of the subject matter insured, so shipowners with valued policies may fare better if they make a claim during periods of falling market rates. In such scenarios, those with unvalued policies may find that any recovery will be only a fraction of what the ship was worth at the time when they took out the policy.

This makes it extremely important for those insuring ships to obtain policies with the proper wording, especially since the distinction between valued and unvalued marine policies has become the subject of legal disputes in many countries.

Policies will also include language to include elements of the [York Antwerp Rules](https://www.investopedia.com/terms/y/york-antwerp-rules.asp). These rules establish costs and liability for the maritime industry.

> **Article Sources**
>
> 1.  The National Archives. "[Marine Insurance Act 1906](https://www.legislation.gov.uk/ukpga/Edw7/6/41/section/28)."