A commercial property policy carries an agreed value of $750,000, a limit of $750,000 and a $5,000 deductible. A covered loss of $200,000 occurs. What does the insurer pay?
Explanation
The agreed value option suspends the coinsurance condition for the term shown, in exchange for the insured filing a statement of values the insurer accepts. With coinsurance out of the way and the limit at least equal to the agreed value, the covered loss is paid in full up to the limit: $200,000 less the $5,000 deductible is $195,000. The answers that apply a coinsurance penalty misread the endorsement, and the deductible is not waived by agreed value.
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