DEFINITION of 'Collateral Value Insurance'

A type of business insurance used by lenders to guarantee the value of appraised property. Collateral value insurance also guarantees a minimum liquidation value in the event the property must be sold. In most cases, the property being used as collateral is appraised before a certificate of guarantee is issued.

BREAKING DOWN 'Collateral Value Insurance'

Many insurers offer this type of protection, which is used primarily by asset-based lenders. In some cases, this type of insurance can be used for liquid assets such as closely held stock. Usually, however, it is geared for tangible property, such as buildings or equipment.

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