What is established when the assured and the underwriter agree upon a definite value for insured property?

When the assured and the underwriter agree upon a definite value for insured property, this establishes a valued policy. In a valued policy, the insured amount is predetermined and agreed upon by both parties at the time of the policy's inception, which means in the event of a loss, the insured will receive that agreed-upon amount without the need for further calculation or assessment of the property's value at the time of the loss. This type of policy is particularly important for items that may be difficult to value accurately or where market values can fluctuate significantly, providing clarity and assurance to both the insurance provider and the policyholder.

On the other hand, other types of policies, such as actual cash value policies, calculate the payout based on the current market value of the property at the time of loss, minus depreciation. Replacement policies cover the cost to replace the property with a new one of similar kind and quality, regardless of its original value. Guaranteed policies typically refer to specific guarantees but do not pertain directly to the agreement on a definite value of insured property as seen in valued policies.