Property Insurance Fundamentals
Policy anatomy
Build every property answer from DICE: Declarations (who, what, where, how much, when), Insuring agreement (what is promised), Conditions (duties after loss, appraisal, other insurance, cancellation, mortgagee clause) and Exclusions. Read the causes of loss form separately from the coverage form - basic, broad and special (open perils) forms change what is covered without changing the limits.
Limits, deductibles, valuation
Limits may be specific, scheduled, blanket or agreed value. Deductibles can be flat, aggregate, or a percentage of the Coverage A limit (common with named-storm deductibles) - a percentage applies to the limit, not to the loss amount. Valuation choices are ACV, replacement cost, functional replacement cost and agreed value. Coinsurance is a penalty feature, not a bonus: it only penalizes an insured who insures below the stated percentage.
Worked coinsurance example
Building value $1,000,000; 80% coinsurance; carried limit $600,000 (required $800,000); a $100,000 covered loss, no deductible. Payment = (carried ÷ required) × loss = (600,000 ÷ 800,000) × 100,000 = $75,000. Had the limit been $800,000 or more, the full $100,000 would be paid, capped at the policy limit.
Traps
Flood and earth movement are excluded in essentially every property form. Other insurance clauses (pro rata, primary/excess) create nonconcurrency disputes. Pair-and-set, salvage, debris removal and preservation of property are commonly tested. Duties after loss - prompt notice, proof of loss, cooperation, protection of property - can void coverage if breached.