Define: Agreed Amount Clause

The Agreed Amount Clause is a provision commonly found in insurance policies that allows the insured and the insurer to agree on the value of the insured property at the time the policy is issued. This clause is typically used for property insurance, such as for buildings or personal belongings.

Under the Agreed Amount Clause, the insured and the insurer mutually determine the value of the property, which becomes the maximum amount payable by the insurer in the event of a covered loss. This agreed amount is usually based on an appraisal or other valuation method agreed upon by both parties.

The purpose of the agreed-upon amount clause is to provide certainty and avoid disputes over the value of the insured property in the event of a loss. By agreeing on the value upfront, both parties can avoid lengthy and costly valuation processes after a loss occurs.

It is important to note that the agreed-upon amount clause does not necessarily mean that the insurer will pay the full agreed-upon amount in every situation. The insurer will still assess the extent of the loss and determine the appropriate amount to be paid based on the terms and conditions of the policy.

Overall, the Agreed Amount Clause provides a mechanism for the insured and the insurer to establish a predetermined value for the insured property, ensuring a smoother claims process and reducing the potential for disputes over valuation.

This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 11th April 2024.