Agreed Amount Clause

What Does Agreed Amount Clause Mean?

The agreed amount clause is a provision in a commercial property insurance policy that removes the co-insurance requirement once the policyholder submits and signs a statement of values for the covered property. This provision remains binding until the policy expires.

Insuranceopedia Explains Agreed Amount Clause

The agreed amount clause requires the submission of a statement of values, which is a document detailing the value of the insured property, signed by the policyholder. This statement serves as the legal basis for determining the coverage amount once the risk is covered by the insurance company. As a result, the insured cannot later dispute the coverage amount.

Additionally, the absence of co-insurance means that if the coverage is insufficient, the policyholder will be responsible for covering the shortfall. This situation may arise if the policyholder undervalues their property in the statement.

This clause is also referred to as the “agreed value coverage option” or “provision.”