The "agreed amount clause" is a provision commonly found in insurance policies that allows the insured and insurer to agree on a specific predetermined amount to be paid in the event of a covered loss or claim. This clause sets forth a clear and agreed-upon value for the insured property, which eliminates the need for valuation assessments after the loss occurs.
Under this clause, the agreed amount is determined by mutual understanding between the insured and the insurer at the time of policy inception or renewal. It provides certainty to both parties regarding the value of the insured property, including buildings, contents, inventory, or any other personal or real property covered by the policy.
The agreed amount is typically based on factors such as replacement cost, market value, or independent appraisal. In the event of a loss, the insurer agrees to pay the agreed amount without further negotiation or proof of value. This simplifies the claim process and avoids disputes over the value of the property at the time of the loss.
The agreed amount clause offers benefits to both parties. For the insured, it provides peace of mind knowing that they will receive a predetermined amount in the event of a covered loss. For the insurer, it reduces the risk of overpayment or underpayment for the loss, as the agreed amount represents a fair and reasonable valuation agreed upon by both parties.
Overall, the agreed amount clause serves as a valuable tool in insurance policies, providing clarity and certainty regarding the value of insured property and streamlining the claims process for both the insured and insurer.
