A more thorough explanation:

A valued-policy law is a legal requirement that insurance companies must pay the full amount of the insurance to the policyholder in the event of a total loss, regardless of the actual value of the property at the time of the loss. This means that the policyholder will receive the full amount of coverage they purchased, even if the property is worth less than the amount of coverage.

For example, let's say a homeowner has a valued-policy insurance policy for their home, with coverage for $500,000. If their home is destroyed in a fire and the actual value of the home at the time of the loss is only $400,000, the insurance company is still required to pay the full $500,000 to the homeowner.

Another example could be a car owner who has a valued-policy insurance policy for their vehicle, with coverage for $20,000. If their car is stolen and the actual value of the car at the time of the loss is only $15,000, the insurance company is still required to pay the full $20,000 to the car owner.

These examples illustrate how valued-policy laws protect policyholders from receiving less than the full amount of coverage they purchased, even if the actual value of the property is less than the coverage amount.