Agreed value, or guaranteed value, is an amount you and your insurer agree a specific item is worth. In the event of a total loss covered by your policy, the insurer would pay the agreed-upon amount.
When is agreed value used?
Agreed value might be used when the replacement cost is difficult to calculate or measure, such as a historic building or classic car.
What is the replacement cost?
Replacement cost is the amount it would cost to replace an asset with an asset of similar kind and quality at the time an insurance claim is made.