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Contract trap · Insurance

Hidden sub-limits & deductibles

Inside the headline sum insured, categories are capped (jewellery $1,500, cash $200, single-article limits, mould, dental abroad, chronic flare-ups); the deductible is 1-5% of the sum insured (hurricane) or 10-20% (earthquake) or a conditional/dynamic franchise that grows with each claim; and if the sum insured is below true value every partial claim is scaled down in proportion (US 80% coinsurance; RU ст. 949 ГК default).

Severity
Serious
How often it turns up
Almost always
Holds up?
Usually enforceable
Clause phrases
24

What it looks like in a contract

Redline matches these phrases against your document verbatim. Drafters rarely invent new wording — they copy it, which is why the same sentences turn up across unrelated contracts.

In English-language contracts

  • single article limit
  • special limits of liability
  • sub-limit
  • the most we will pay
  • aggregate limit
  • percentage deductible
  • hurricane deductible
  • 2% of Coverage A
  • the deductible applies separately to each
  • average clause
  • coinsurance clause
  • 80% of the replacement cost

In Russian-language contracts

  • лимит ответственности по одному страховому случаю
  • не более 10% от страховой суммы
  • лимит на одну вещь
  • агрегатная страховая сумма
  • страховая сумма уменьшается на сумму произведённых выплат
  • франшиза
  • безусловная франшиза
  • динамическая франшиза
  • франшиза применяется начиная со второго страхового случая
  • в размере % от страховой суммы
  • пропорционально отношению страховой суммы к страховой стоимости
  • по системе первого риска

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Why it bites

The big number on the schedule is not what you can claim for the thing you actually lose; a 2% deductible on a $400k house is $8,000 so most storm claims fall inside it; a home insured for 50% of value gets 50% of a kitchen-fire claim; RU buyers see «КАСКО за 15 000 ₽» and miss «безусловная франшиза 30 000 ₽ по каждому случаю».

Is it enforceable where you are

The same clause can be routine in one country and void in another. What follows is what the law says where you are — not advice on your particular contract.

In the UK, the Insurance Act 2015 and Consumer Insurance (Disclosure and Representations) Act 2012 restrict what an insurer may avoid; in the EU, the IDD and Directive 93/13 apply, and in the US, insurance is regulated state by state.

United States

Enforceable; ISO HO-3 'Special Limits of Liability' need only appear in the form; hurricane deductibles exist in coastal states with statutory triggers and many states require the dollar amount on the declarations page; coinsurance (80% rule) standard and enforceable if disclosed.

European Union

Limits, deductibles and Unterversicherung (German VVG §75 proportional reduction unless waived) are core price/risk terms that must be transparent (Van Hove); the IDD product information document must summarise the main limits.

  • Cited
  • IDD
  • Van Hove
  • VVG §75

United Kingdom

Enforceable if transparent and prominent (CRA 2015 s.64); ICOBS 6 requires limits and excesses to be made clear; FOS upholds complaints where a significant limit or excess (e.g. escape of water) was not highlighted at sale; an insurer that never asked for a rebuild figure cannot fault the consumer; many home policies now waive average.

  • Cited
  • CRA 2015 s.64

Russia

Permitted: страховая сумма by agreement (ст. 947 ГК), aggregate vs non-aggregate must be stated; франшиза under ст. 10 п. 9 Закона 4015-1 must be in the policy and set in good faith (п. 21 Пленума ВС № 19/2024); ст. 949 ГК — proportional payment by default, contract may provide first-risk; ст. 948 — insurer cannot dispute the agreed страховая стоимость unless deceived; п. 38 Пленума — no proportional reduction where the sum insured declines by schedule; Базовый стандарт ЦБ (2018) requires disclosure of limits before sale.

  • Cited
  • Пленума ВС № 19/2024
  • ст. 10 п. 9
  • ст. 947 ГК
  • ст. 948
  • ст. 949 ГК

Where this has actually happened

Regulator actions, court rulings and the contracts they were fought over.

  • ISO HO-3 homeowners form 'Special Limits of Liability' (US): e.g. $200 for money, $1,500 for theft of jewelry, watches and furs
  • Insurance Information Institute (US): hurricane and wind/hail deductibles are 'typically from 1 percent to 5 percent' of the insured value
  • Russian Civil Code art. 949: with partial insurance the insurer pays losses pro rata to the ratio of sum insured to insured value unless the contract provides a higher amount

What to do

In order, from the thing that takes a minute to the thing that takes a letter.

  1. Schedule high-value items and buy endorsements
  2. Check the 'Special limits' / «Таблица лимитов» per item, per claim and per year, aggregate vs non-aggregate
  3. Convert percentage deductibles to money and check whether they apply per claim, per item or from the second claim
  4. Get a rebuild-cost estimate annually and buy 'first risk' / 'no average' / extended replacement cost
  5. RU: check whether the policy fixes a страховая стоимость and overrides ст. 949 (по системе первого риска)
  6. Scheduled declining sums do not trigger the proportional rule (п. 38 Пленума ВС № 19/2024).

Check your own document

Traps that travel with it

Drafters who use one of these usually use several.

79 traps · 1789 verbatim clause phrases