True or False: A valued policy indicates that the insured item has a specific agreed value stated in the policy.

A valued policy indeed stipulates that the insured item has a specific agreed value stated in the policy. This means that in the event of a total loss, the insurer agrees to pay out that predetermined amount, regardless of the actual market value or replacement cost of the item at the time of loss. This type of policy is common for unique items such as art, antiques, or custom-built vehicles, where determining the value can be subjective or variable.

With a valued policy, both the insured and the insurer have certainty about the amount that will be paid in the event of a loss, which can prevent disputes during claims processing. This clarity helps policyholders understand their coverage and gives them peace of mind knowing that they will receive compensation reflecting the agreed-upon value.