What must the insurer do when a valued policy is in effect and a loss occurs?

When a valued policy is in effect and a loss occurs, the insurer is required to compute liability based on the agreed value. A valued policy is a type of insurance contract in which the parties agree on the worth of the insured property at the time the policy is issued, rather than determining the payout based on the market value at the time of the loss. This means that in the case of a loss, the insurer will pay the agreed-upon amount, regardless of the actual market value of the property at the time the loss occurs. This principle simplifies the claims process, eliminating disputes over what the property was worth at the time of the loss and providing clarity and certainty to both the insurer and the insured regarding potential compensation.