Glossary

Agreed value

A property policy option where insurer and insured agree on the covered value in advance, which suspends the coinsurance penalty for the agreed period.

Also called: agreed value coverage, agreed amount, coinsurance waiver

Agreed value is an optional coverage in the ISO commercial property forms (see CP 00 10). You submit a signed statement of values, the insurer accepts the amount of insurance as adequate, and the coinsurance condition is suspended until the agreed-value expiration date in the declarations. A partial loss is then paid up to the limit without a proportional reduction for underinsurance.

Say a warehouse is insured for $2.4 million on a signed worksheet with agreed value. A $300,000 fire loss is paid in full, less the deductible, even if true replacement cost has crept up to $2.9 million. Without the option, an 80% coinsurance clause would have required $2.32 million and tested the claim against the actual value on the loss date.

The protection depends on the worksheet. If the agreed-value expiration date is not extended at renewal, coinsurance comes back, and inaccurate values can invite a dispute over misrepresentation. Review the figures every year against current construction costs. The guide on agreed value and blanket limits explains how the option works alongside a statement of values and margin clauses.

Last reviewed October 10, 2026

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Related terms

Coinsurance A property policy condition requiring you to insure to a set percentage of value, or share the loss. (Health plans use the word for a cost share.) Insurance to value Carrying a property limit that matches the full value of what you insure, so a loss is paid in full and no coinsurance penalty applies. Blanket limit A single property limit applied across several buildings, locations or types of property, so the insurer pays a loss at any one up to the total. Statement of values A schedule listing each insured location with its building, contents and income values and construction details, used to rate and model a property program. Replacement cost A valuation basis that pays the cost to repair or replace damaged property with like kind and quality, without deducting for depreciation.

Related guides

Agreed value, blanket limits and margin clauses How agreed value suspends coinsurance, how a blanket limit spreads one limit across locations, and how a margin clause caps the payment at each building. Aviation insurance for business aircraft owners and operators Aircraft hull and liability, why the CGL excludes aircraft, the pilot and use warranties that void claims, and what charter users and airport businesses need. The statement of values: what property underwriters need How to build a statement of values underwriters trust: the fields, ISO construction classes, replacement cost basis, and how errors in it surface in a claim. The coinsurance clause and how underinsurance is penalized How the coinsurance formula works, with worked penalty examples for buildings and business income, and four ways to avoid an underinsurance penalty. Commercial package policies: when a BOP is too small A commercial package policy combines separate coverage parts under shared declarations and conditions. When values, locations or class outgrow a BOP. Construction cost inflation and your property limits How rising rebuilding costs create underinsurance, the 2026 cost indexes to watch (Verisk 360Value, BLS PPI) and how coinsurance and agreed value respond.

Related tools

Coinsurance penalty calculator See what a commercial property policy pays when your limit falls short of the coinsurance requirement, how big the penalty is and the limit that avoids it.