A standard homeowners form covers trees, shrubs and plants for up to 5 percent of the Coverage A limit, but no more than $500 for any one tree, shrub or plant. Coverage A is $360,000 and a covered fire destroys six ornamental trees worth $1,200 each. The insurer pays:
Explanation
Two caps run at the same time. Five percent of the $360,000 Coverage A limit is $18,000, far more than this loss needs, so the per-item cap controls: six trees at $500 each is $3,000. The $7,200 figure is the trees' actual value and ignores the per-item limit, while $18,000 is the outer ceiling the loss never reaches. A percentage sublimit sets the boundary, and an inner per-item limit can bind long before it.
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