What Is a Valuation Allowance?

Insurance valuation is the verification or estimation of the value of the subject-matter insured at the time of signing the insurance contract, and is the basis on which the insurer determines the amount of protection of the subject-matter insurance. The level of insurance valuation is directly related to the interests of the insured. If the value of the subject-matter insured is lower than the actual value of the subject-matter insured, the amount of insurance will be reduced accordingly; when the subject matter is damaged, the insured will not be able to obtain sufficient economic compensation. ^[1]