AGREED VALUATION Meaning and
Definition
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Agreed valuation refers to an agreed or predetermined value assigned to a particular item or property, typically by an insurance company. This agreed value serves as the basis for determining the compensation or coverage in the event of a loss or damage. Unlike the typical market value, which can fluctuate over time, the agreed valuation remains constant throughout the insurance policy term.
When an individual seeks insurance coverage for items of high value, such as rare collectibles, artwork, or vintage vehicles, an agreed valuation approach becomes relevant. In this context, both the policyholder and the insurer establish a mutual agreement about the item's value before finalizing the insurance policy. The agreed valuation is often determined by considering factors such as the item's condition, rarity, historical significance, and market demand.
The purpose of having an agreed valuation is to ensure that the policyholder receives adequate compensation to cover the full value of the item in case of loss, theft, or damage. This valuation method reduces the risk of underinsurance and potential disputes between the insured party and the insurance provider regarding the item's value.
In summary, agreed valuation is a predetermined value established between the policyholder and the insurance company to determine the compensation or coverage for a specific item. It provides a more accurate and reliable assessment of the item's worth, ensuring appropriate insurance coverage in the event of a claim.
Etymology of AGREED VALUATION
The etymology of the word "agreed valuation" can be broken down as follows:
1. Agreed: The word "agreed" comes from the Old English verb "agrēan", meaning "to please" or "to satisfy". It can be traced back to the Proto-Germanic word "agrejaną".
2. Valuation: The word "valuation" comes from the Latin noun "valuatĭo", derived from the verb "valēre", meaning "to be worth" or "to have value". It can be linked to the Proto-Indo-European root "*wal-", meaning "to be strong" or "to have power".
When these two words are combined, "agreed valuation" refers to the process of establishing or determining the value or worth of something that has been agreed upon by all parties involved.
