What refers to the amount of insurance agreed upon for a total loss, irrespective of the actual value?

The term that refers to the amount of insurance agreed upon for a total loss, irrespective of the actual value, is known as "Stated Amount." This concept is often used in insurance policies, particularly in cases where the value of an item may fluctuate or is difficult to appraise accurately. By establishing a stated amount, both the insurer and the insured agree on a specific figure that will be paid out in the event of a total loss, irrespective of the current market value or actual cash value of the item.

This approach benefits the policyholder by providing clarity and assurance about what they will receive in a loss situation, without being subject to depreciation or other valuations at the time of the claim. Therefore, the stated amount serves as a predetermined settlement figure, allowing for a smoother claims process.

Understanding this term is important for both agents and clients, as it helps in managing expectations and ensuring that adequate coverage is in place for the insured items.