Agreed Amount Form

What Does Agreed Amount Form Mean?

The agreed amount form is a property insurance policy that specifies the exact amount the policyholder will receive in the event of damage or loss to the insured property. This amount is renegotiated during the policy renewal period to reassess what is acceptable to both parties.

Insuranceopedia Explains Agreed Amount Form

The agreed amount represents the joint valuation of the policyholder and the insurance company (or its representative). This is the amount the company will pay in the event of a loss or total damage. The agreed amount is based on the market value of the property.

If the property is damaged, the insurance company will cover the lesser of the agreed amount specified in the contract or the cost of repairing the damage. How an insurer values your property at the time of a claim is one of the bigger differences between the best homeowners insurance companies, so it is worth checking whether agreed amount, replacement cost, or actual cash value applies before you buy.

If this provision is not included in the insurance policy, the policyholder can request an endorsement to add this feature.

An endorsement may also be requested if the market value of the insured property changes. In such cases, the endorsement will adjust the agreed amount accordingly. Knowing which valuation method your policy uses fits alongside the broader question of what homeowners insurance covers, since the two together decide how much money actually reaches you after a loss.