Posted in Finance, Accounting and Economics Terms, Total Reads: 241
Definition: Agreed Amount Clause
It is a clause in the insurance contract for properties that stipulates that in case a unlikely event occurs where the policy holder could claim the amount, the insurance company will pay the amount to repair the damages or replace the property or an agreed upon amount which is set by the policy holder.
This essentially ensures that the amount of insurance meets the co-insurance clause. To enforce this clause the insurance company requires a declaration of property values signed by the policy holder as a prerequisite for activating this agreed amount clause. Usually the policyholder in this scenario pays a higher premium.
Co-insurance clause stipulates that a property has to be insured for a certain percentage of its value (generally 80%) in order to claim the entire amount for the damage on it. The property value is determined as its market value less the value of the land.