Agreed Value: But is it?

I was on a car bulletin board today reading about car repairs. One of the threads was on insurance. There were a few people who had "agreed value" policies, or so they thought. But, do you really have an agreed value policy?

There are two different types of policies when an appraisal is needed. The first type requires the insurance company to pay the replacement cost UP TO the appraisal amount. The second type requires the insurance company to pay exactly the appraisal amount. (And while this came up with cars, the same rules apply with things like jewelry.) Let me give you some examples.

Policy 1: You have an appraisal for $5,000. The replacement cost is $3,000. The insurance company will only pay you $3,000.

Policy 2: You have an appraisal for $5,000. The replacement cost is $5,000. The insurance policy is required to pay you $5,000.

Read your policy and ask questions. Make sure you know what you are buying.