Valued Policy Law - VPL

Dictionary Says

Definition of 'Valued Policy Law - VPL'

A statute that requires insurance companies to pay the full value of the insurance to an insured entity in the event of a total loss. The Valued Policy Law does not consider the actual value of the insured property at the time of the loss; instead, the total loss mandates the total payment.

Not all states within the United States have these laws. States that do have Valued Policy Laws include Arkansas, California, Florida, Georgia, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, South Carolina, South Dakota, Tennessee, Texas, West Virginia and Wisconsin. Wisconsin was the first state to pass a Valued Policy Law in 1874.

Investopedia Says

Investopedia explains 'Valued Policy Law - VPL'

For example, if a property is insured for $200,000 and is destroyed by a fire, the insurance company would be required to pay the policy's stated value for the property ($200,000) without deduction or offset.

Hurricane Katrina forced the insurance industry in Louisiana to examine the Valued Policy Law; few policyholders were paid their entire coverage amount because of interpretations of the Valued Policy Law. Some insurers claim that the law does not apply because certain losses were a result of a non-covered peril (flood); that certain losses were a result of "mixed causation" - a combination of a covered peril (wind) and a non-covered peril (flood); and that the total loss was offset by other sources including the National Federal Flood Insurance Program and FEMA grants.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Named Perils Insurance Policy

    A home insurance ...
  2. Against All Risks - AAR

    An insurance ...
  3. Hazard Insurance

    Insurance that ...
  4. Flood Insurance

    A financial ...
  5. Catastrophe Insurance

    Insurance to ...
  6. Moving Average - MA

    An indicator ...
  7. Moving Average Chart

    A tool used by ...
  8. Advance/Decline Line - A/D

    A technical ...
  9. Indicator

    Statistics used ...
  10. McClellan Oscillator

    A market breadth ...

Articles Of Interest

  1. Getting A Grip On The Cost Of Gas

    Feeling overwhelmed by rising oil prices? We offer some tips that will save you money.
  2. Tax Relief For Katrina Victims

    Find out if you qualify for the assistance offered to hurricane survivors by the U.S. government.
  3. Do You Need Casualty Insurance?

    Find out how different types of coverages can protect you and which policy is right for you.
  4. Understanding Lender-Required Flood Insurance

    Having to buy flood insurance shouldn't be a surprise. Find out what you need to know when purchasing or refinancing a house.
  5. Intro To Insurance: Property And Casualty Insurance

    Having the right kind of insurance is a critical component of any good financial plan.
  6. Trading Double Tops And Double Bottoms

    We look at how Bollinger Bands help accurately project entry and exit points for pattern traders.
  7. Triple Screen Trading System - Part 4

    How can a trader use the Elder-Ray oscillator as the second screen of this system? Find out here.
  8. Triple Screen Trading System - Part 3

    Learn about market wave, the second screen in this three-part system.
  9. Triple Screen Trading System - Part 2

    Market tide is the basis for making trading decisions in this three-part system.
  10. Triple Screen Trading System - Part 1

    Learn to take advantage of both trend-following and oscillator techniques to analyze your trading decisions.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center