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A commercial property policyholder activates the Agreed Value option on a CP 00 10 form. Which of the following best describes the practical effect on a partial loss?
Coinsurance is waived for the policy period it is in effect
BThe policy converts to a valued policy paying the agreed amount even on partial loss
CAll deductibles are eliminated
DReplacement cost is automatically included
Why this is the answer
Activating the Agreed Value Optional Coverage on the Commercial Property form suspends the coinsurance condition for the policy period. The insured submits a Statement of Values and the carrier agrees to a limit; provided that agreement holds, partial losses are paid without any coinsurance ratio applied (up to the policy limit). Agreed Value is not the same as a valued policy — actual loss is still required, and partial losses pay only for the actual damage, just without the underinsurance penalty.
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