What basis of valuation is typically used when writing hull and cargo insurance?

The basis of valuation typically used when writing hull and cargo insurance is the valued policy approach. This method ensures that a specific amount is agreed upon in advance by both parties at the time the policy is issued. In the context of hull and cargo insurance, the valued policy reflects the importance of having a clearly defined value for the items being insured, taking into account their worth at the time the insurance contract is created.

A valued policy provides certainty in the event of a total loss, allowing the insured to receive the agreed-upon amount without having to prove the actual value at the time of loss. This is particularly beneficial in maritime insurance, where the valuation of vessels and cargo can fluctuate due to various factors, such as market conditions or physical depreciation.

In contrast, the other valuation methods like replacement cost, actual cash value, and market value are generally used in different types of property insurance or may be applicable in situations where the value is not predetermined. Each of those methods varies in how it assesses damage or loss but lacks the definitive agreement on value that a valued policy offers in hull and cargo insurance.