Principles of Risk Management and Insurance, 13th Edition

Section I Conditions

Section I of the homeowners policy contains numerous conditions. The most important are discussed here.

Insurable Interest and Limit of Liability

If more than one party has an insurable interest in the property, the insurer’s liability for any one loss is limited to each insured’s insurable interest at the time of loss but not to exceed the maximum amount of insurance.

Deductible

The deductible shown on the declarations page applies to each covered loss.⁶ The deductible can be increased to reduce premiums. For example, if the insured increases a $250 deductible to $500, it can reduce premiums by up to 12 percent; and raising the deductible to $1,000 can reduce premiums by up to 25 percent. The deductible does not apply to ...