What stipulation does an Agreed Value provision have during a total loss?

The Agreed Value provision is designed to establish a predetermined amount that the insurer will pay in the event of a total loss, which is particularly valuable for items like classic cars or high-value collectibles. This provision ensures that both the insurer and the insured understand the value of the item at the time the policy is created, mitigating disagreements later on.

Under this provision, in the case of a total loss, the insurer pays the fixed amount that was agreed upon, rather than the depreciated value of the item. This is crucial because typical insurance policies may pay based on the item's actual cash value (which takes depreciation into account), whereas the Agreed Value provision guarantees that the insured will receive the exact amount specified in the policy as long as the total loss occurs.

Therefore, the provision is not about paying amounts according to depreciation schedules, adjusting based on current market value, or applying a fixed rate across multiple vehicles. Instead, it focuses solely on paying the amount that was fixed and agreed upon in the policy documents, making it a reliable option for policyholders who wish to secure their assets at a value they feel is right.