Definition - What does Valuation Method mean?
A valuation method, in the context of insurance, refers to the means by which insurance adjusters calculate the monetary value of losses reported in a claim. This helps the insurance company determine the validity of a claim and the estimated amount of covered losses or damages.
Insuranceopedia explains Valuation Method
As part of a valuation, insurance adjusters establish whether the insured suffered financial losses, whether the insurance policy covers it, the monetary worth of the damage or loss, and the estimated cost to repair or replace the item in question. For example, if a policyholder crashes into a tree and files a claim, the adjuster would review it, evaluate the damage, and determine a ballpark figure for the cost of repairs. Afterward, the valuation can be set and the claim processed.