What is true regarding the deductible in the Building and Personal Property Coverage Form?

In the Building and Personal Property Coverage Form, the correct understanding of the deductible is that it requires the insured to pay a specified amount out-of-pocket before the insurance coverage kicks in to cover the remaining loss. This means that if a claim is made, the insurer will subtract the amount of the deductible from the total loss before providing compensation. For instance, if a property has a deductible of $1,000 and suffers a loss valued at $10,000, the insurer will only pay $9,000 after the deductible amount is accounted for.

The concept of a deductible serves to prevent small claims and encourages policyholders to take care of their property, as they have a financial stake in the risk. Understanding this principle is essential for anyone studying for the Florida 2-20 Insurance Agent License, as it highlights the responsibilities of both the insurer and the insured in the event of a claim.