Definition
Agreed value is a predetermined valuation amount for an asset that is established and documented between an insurance company and policyholder at the time a policy is written, before any loss occurs. This value becomes the maximum amount the insurer will pay in the event of a total loss, regardless of the asset’s actual market value at the time of claim.
Significance in Alternative Asset Valuation
Agreed value policies are particularly important for alternative assets like fine art, collectibles, vintage wines, and luxury goods because these items often lack standardized pricing and can experience significant value fluctuations. Unlike traditional assets with readily available market prices, alternative assets require specialized expertise to determine appropriate coverage amounts.
For high-net-worth individuals and collectors, agreed value coverage provides certainty and eliminates disputes over valuation at claim time. This approach is especially valuable for unique or rare items where replacement cost may be impossible to determine or where the asset has appreciated significantly since purchase.
The agreed value must be supported by a qualified appraisal that meets insurance company standards. This creates a direct link between professional valuation services and insurance coverage, making accurate initial valuations critical for adequate protection.
How Impossival Approaches This
We provide comprehensive valuations that meet insurance company requirements for agreed value policies. Our AI-powered platform analyzes market data, comparable sales, and condition factors to establish defensible valuations that insurers accept for agreed value coverage.
Related Concepts
• Replacement Cost - Alternative insurance valuation method based on current market prices • Actual Cash Value - Insurance valuation that factors in depreciation • Fair Market Value - Open market transaction value used as baseline for agreed value • Qualified Appraisal - Professional valuation required to support agreed value coverage