Ad Val, short for ad valorem, is a Latin term commonly used in economics and taxation. It refers to a type of taxation or duty imposed on goods or property based on their assessed value or worth. Ad Val is derived from the Latin phrase "according to value."
In the context of taxation, the ad valorem duty is calculated as a percentage of the value of the goods, rather than being fixed. This means that the amount of tax paid increases or decreases proportionally with the value of the item being taxed. Ad valorem taxes are often applied to a wide range of commodities, including real estate, automobiles, luxury goods, and imports.
Ad Val can also be associated with insurance policies, particularly property and casualty insurance. In this context, when determining the premium for an insurance policy, an ad valorem rate may be applied based on the value of the property or asset being insured. This ensures that the policyholder pays a premium that is proportional to the value of the insured item.
Overall, the term Ad Val is used to describe a system of taxation or insurance premium calculation that is based on the assessed value or worth of the goods, property, or assets. By using the ad valorem approach, governments and insurers can ensure that taxes or premiums are fair and proportionate to the value of the items being taxed or insured.
