What type of policy provides an agreed amount of Actual Cash Value?

A Stated Value Policy is designed to provide an agreed amount that represents the Actual Cash Value (ACV) of the insured property at the time of the loss. This type of policy allows the insured and the insurer to agree on a specific value assigned to an asset, which can simplify the claims process in the event of a loss. The agreed value is not necessarily the market value but rather a specific figure that both parties have consented to.

This policy type is particularly useful when determining the value of unique or specialized assets that may not have a clear market value. It offers a level of certainty and can help avoid disputes over depreciation or valuation during claims settlement.

In contrast, other policy types like Comprehensive Coverage primarily focus on covering a broad range of risks rather than establishing a pre-agreed valuation. A Market Value Policy bases coverage on the current market price, which can fluctuate and might not align with the actual cash value. A Replacement Cost Policy covers the cost to replace the item without considering depreciation, which differentiates it from the concept of actual cash value. Therefore, Stated Value Policy is most closely aligned with providing an agreed amount for ACV.