How are securities valued at the time of loss under a Commercial Crime Policy?

Under a Commercial Crime Policy, securities are valued by their value at the day of loss. This approach ensures that the insured party receives compensation based on the most accurate and current valuation of the securities at the specific time they were lost. The value reflects what the owner could actually obtain for the securities in the market immediately before the loss occurred.

This method of valuation is crucial because it directly correlates to the actual financial impact experienced by the policyholder. If the securities have appreciated or depreciated significantly by the day of loss, this valuation method acknowledges that change, allowing for a more equitable settlement.

Other valuation methods, such as replacement cost, market value, or face value, do not necessarily align with the actual financial position or potential recovery of the insured at the specific moment of loss. For example, replacement cost might imply additional expenses incurred to acquire securities comparable to those lost, while market value could fluctuate before the loss is settled. Furthermore, face value pertains to the original value of a security, which may not reflect its true market or loss value at the time of the incident. Therefore, valuing securities at their value on the day of loss provides the fairest assessment sought by the policyholder.