What are insurance contracts that predetermine the amount to be paid when property is destroyed called?

The term for insurance contracts that predetermine the amount to be paid when property is destroyed is referred to as agreed value contracts. These contracts specifically stipulate a predetermined value for the property at the time the policy is issued, rather than determining payment based on the replacement cost or actual cash value at the time of loss.

In the event of a covered loss, the insurer will pay the agreed amount without deduction for depreciation or any other adjustments. This arrangement provides both the policyholder and the insurer with clarity and certainty regarding the insurance payout, which can be especially valuable in cases of total loss.

Other types of insurance contracts, such as replacement cost contracts and actual cash value contracts, calculate payouts differently. Replacement cost contracts cover the cost to replace the property without considering depreciation, and actual cash value contracts take into account depreciation at the time of the loss, paying the market value rather than a set amount. Guaranteed replacement cost contracts provide coverage for rebuilding or replacing the property without any consideration of the policy limits, but they do not predetermine a specific payout amount in advance like agreed value contracts do.