After a burglary, an agent’s client suffered significant damage to the home, including losing a safe containing jewelry, money and guns. Together, the jewelry and money alone were worth more than $88,000—but the client received only $1,200 from the insurer.

Q: "The carrier settled the claim and applied the deductible to the building portion. It has been my experience that the deductible is applied to the loss; then the limits are applied, with the deductible absorbed in the amount over the limit. Is this not the industry standard?"

A: “The current ISO HO-3 policy states, 'Subject to the applicable limit of liability, we will pay only that part of the total of all loss payable that exceeds the deductible amount shown in the Declarations.' The insurer should pay the amount of the loss that exceeds the deductible (‘that part of the total of all loss payable that exceeds the deductible'), then limit it to the applicable limit of liability ('Subject to the applicable limit of liability').

In other words, you subtract the deductible from the total insured loss (building and contents), then apply any limits or sublimits in the policy. Check out the Virtual University article “Sublimits and Deductibles” for additional information.”

Bill Wilson is director of the Big “I” Virtual University.

This question was originally submitted by an agent through the VU’s Ask an Expert Service. Answers to other coverage questions are available on the VU website. If you need help accessing the website, email logon@iiaba.net to request login information.