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      Question

      What is the purpose of an agreed value policy?   

      A To avoid underinsurance Correct Answer Incorrect Answer
      B To cover losses on a replacement cost basis Correct Answer Incorrect Answer
      C To cover losses on a market value basis Correct Answer Incorrect Answer
      D To cover losses on a first loss basis Correct Answer Incorrect Answer
      E None of the above Correct Answer Incorrect Answer

      Solution

      An agreed value policy establishes the value of the insured property at the time the policy is issued. This helps avoid disputes over the value of the property in the event of a loss, particularly for items that can be difficult to value after a loss occurs.

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