What is the primary benefit of creating a "statement of values" for an insurance policy?

Creating a "statement of values" serves as an important tool for providing clarity on the insured property and its corresponding values for underwriting purposes. When an insured party details the values and specifics of their property, it helps underwriters accurately assess risk, determine coverage amounts, and set appropriate premium rates. This clarity ensures that both the insurer and the insured have a mutual understanding of what is covered, reducing ambiguity that could lead to issues down the line.

The statement of values also facilitates the underwriting process by enabling insurers to allocate resources better and assess the potential exposure to loss. By having a well-defined statement, it becomes straightforward for insurers to evaluate each item or property’s declared value, ensuring that the coverage is tailored to the actual needs of the insured.

In contrast, while minimizing claims disputes, facilitating policy transfers, and influencing premium costs can be factors associated with a well-documented policy, the primary function of creating a statement of values is to clearly articulate and clarify what is being insured and at what value. This foundational role in the underwriting process is what makes it so essential.