Which statement is correct concerning the Agreed Value optional coverage under the Building and Personal Property Coverage Form?

The correct statement regarding the Agreed Value optional coverage under the Building and Personal Property Coverage Form is that it suspends the coinsurance requirement. This is significant because, under typical property insurance policies, a coinsurance clause may apply that requires the policyholder to insure their property to a certain percentage of its value. If the insured fails to meet this requirement, they may face penalties in the event of a loss.

The Agreed Value option allows the insured and insurer to agree on a specific value for the insured property at the outset of the policy, which effectively negates the need for coinsurance. This means that in the event of a loss, the insured would be compensated for the full agreed amount even if the property is underinsured, fostering peace of mind for the policyholder.

This principal feature of the Agreed Value option distinguishes it from other coverage forms and enhances the coverage provided, allowing for a more straightforward claims process without the complexities of calculating coinsurance penalties.