Insurance Principles and Policy Coverages
Core principles
Indemnity, insurable interest, utmost good faith, contracts of adhesion, aleatory contracts, subrogation, and the duty to cooperate underpin every coverage question. Read a policy in order: declarations, insuring agreement, exclusions, conditions. The insured generally bears the burden of proving a covered loss; the insurer bears the burden of proving an exclusion applies.
Homeowners mechanics
An HO-3 covers the dwelling on an open-peril basis and personal property on named perils. Distinguish replacement cost (RCV) from actual cash value (ACV = RCV minus depreciation); most Florida policies pay ACV first and hold back recoverable depreciation until repairs are complete. Coverages A through F are dwelling, other structures, personal property, loss of use, personal liability, and medical payments. Deductibles matter: the all-other-perils deductible is a flat dollar amount, while the hurricane deductible is usually a percentage of the Coverage A limit and applies once per calendar year.
Florida-specific coverage
Mold carries a statutory default $10,000 sublimit unless higher limits are purchased. Flood is excluded and written separately (NFIP or private). Sinkhole loss coverage is a separate endorsement with its own definition of structural damage. Wind mitigation credits reduce premiums. Ordinance or law, matching of undamaged materials, and Florida's valued policy law (policy limits for a total loss of a building, subject to statutory exceptions) recur in questions.
Worked example
Coverage A limit $350,000; 2% hurricane deductible; RCV $80,000; ACV $62,000. The deductible is 2% × $350,000 = $7,000, not 2% of the loss. Initial payment = $62,000 − $7,000 = $55,000, with $18,000 of recoverable depreciation withheld pending completion.