What is the most common loss settlement valuation used in property insurance policies?

The most common loss settlement valuation used in property insurance policies is actual cash value. This method assesses the value of a property at the time of loss by taking into account the replacement cost of the property minus depreciation. Depreciation reflects the wear and tear, age, and condition of the property, which is a crucial factor for insurers when determining how much to pay out for a claim.

Actual cash value is widely used because it provides a fair assessment of a property's worth considering its depreciation over time, ensuring that policyholders do not profit from a claim but rather receive compensation that reflects the property's current market condition at the time of loss. This valuation method helps in managing insurance risk and maintaining balanced underwriting practices within the property insurance market.

Other valuation methods, such as replacement cost or guaranteed replacement cost, may offer higher payouts or different calculations, but actual cash value remains the standard approach in most property insurance policies.