What is a principal feature of stated value insurance policies?

Stated value insurance policies are designed to provide coverage for a previously agreed price that is set by both the insurer and the insured at the time the policy is issued. This agreed-upon amount is specifically articulated in the policy, allowing the insured to have a clear understanding of the coverage limit for their property. The primary advantage of stated value insurance is that it can cover unique or hard-to-value items, such as classic cars or artwork, where traditional market value assessments may not adequately reflect true worth.

If a loss occurs, the insurance payout will be based on this stated amount, provided the loss does not exceed it. This feature protects the insured’s interests by ensuring that they have a clear expectation of their coverage in the event of damage or loss.