What items are most commonly insured on an agreed value basis?

The correct answer is that antiques, ships, and works of art are most commonly insured on an agreed value basis because these items are often unique and hold a specific value that can fluctuate widely based on market conditions, condition, and other factors. When insuring such items, both the insurer and the insured agree on a specific value at the outset of the policy. This agreed value eliminates the uncertainty around valuations that may occur in cases of loss or damage, providing peace of mind for the owner.

For antiques, the valuation is based on factors such as age, rarity, and condition, which means that establishing a fair market value can sometimes be quite complex. Ships and works of art also may not have easily comparable values in the market, making the agreed value method particularly suitable to ensure proper compensation in the event of a loss.

In contrast, items such as vehicles and household contents are typically insured on a replacement cost basis, which allows for compensation based on the cost to replace the item rather than a pre-agreed value. Personal liabilities and legal fees are also generally not associated with agreed value insurance, as they pertain more to potential future costs rather than insurable goods. Cash and savings accounts have straightforward values based on the actual amounts held, thus they are