noun
agreed value
In plain English
A pre-set payout amount you and the insurer agree to up front, no depreciation arguments at claim time.
Common on collector cars, yachts, and scheduled jewelry. Backed by an appraisal at the inception of the policy. If the item is totaled, you get the agreed value — not whatever a 'comparable' is selling for at the moment.
What it covers
A fixed dollar amount payable upon a total loss of the covered item, regardless of market fluctuations or depreciation.
What it does not cover
Agreed value is NOT replacement cost. On a partial loss, the insurer still pays the cost to repair, capped at the agreed value.
Where it trips people up
Appraisals expire. Collector-car carriers often want a fresh appraisal every 3-5 years, especially as collector markets fluctuate. Skipping the update means you may be underinsured at claim time.
The technical version
A loss-settlement provision under which the insurer agrees to pay a stated amount upon total loss without consideration of depreciation or market value, typically supported by an appraisal.