Maneuvering Through the Quicksand of 'Agreed Value'
Rough Notes › Vol. 148 Nbr. 6, June 2005
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Summary
From the perspective of property insurance, at least, the term agreed amount could be defined as an agreement between the insured and insurer to suspend the coinsurance or penalty clause applicable to real property, personal property, business income coverages, or any combination thereof. Of course, this definition would require refinement in light of its application being subject to certain insurer rules. While the genesis of this agreed amount or value concept is with marine insurance, it is uncertain when agreed amount or value was first introduced for use with property insurance. The concept of coinsurance first came into being around the beginning of the 190Os; agreed amount or value obviously followed sometime after that. There may be occasions when agents may want to simply request an agreed value clause without consulting with the insured, because the insured may not understand the purpose of this clause in relation to coinsurance. Many insureds find coinsurance difficult to understand and when agreed value is introduced, they develop a one-track mind and assume that agreed amount means the amount payable in the event of substantial loss. If insureds understand the concepts of agreed value and coinsurance, they also must understand that these two provisions are not read in isolation following loss. Some plaintiffs' lawyers like to do this. The entire policy must be read.
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Maneuvering Through the Quicksand of 'Agreed Value'
From the perspective of property insurance, at least, the term "agreed amount" could be denned as an agreement between the insured and insurer to suspend the coinsurance or penalty clause applicable to real property, personal property, business income coverages, or any combination thereof. Of course, this definition would require refinement in light of its application being subject to certain insurer rules.
While the genesis of this agreed amount or value concept is with marine insurance, it ...See the full content of this document
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