First-party property coverages provide for indemnification to the insured, for
damage to or destruction of covered property by an insured peril. There are several concepts set forth in the previous sentence. First, there is the concept of
40 The Complete Book of Insurance
insured capacity. In order to be entitled to payment under the first-party property coverages of a homeowners, condominium owners, townhouse owners, or
tenants’ policy, the person seeking payment must qualify as an insured.
Second, there is the concept of insurable interest. In order to be entitled to
payment under the property coverages of a homeowners policy, the person
seeking payment must not only qualify as an insured but also have an ownership or other insurable interest in the damaged or destroyed item of
property. Although people commonly speak of property insurance as insuring property, it actually does not. Rather, property insurance policies are
personal contracts between the insured and the insurer. The insurer is actually insuring the insured’s pecuniary interest in property. This pecuniary
interest in property of an insured person is the concept of insurable interest.
Third, the item of damaged or destroyed property for which a loss payment is sought under the property coverages of a homeowners policy must
qualify as covered property (see p.43).
Fourth, in order for payment to be made for damage to or destruction of
an item of covered property, the loss to the property must be the result of covered peril. Perils are active physical forces, fortuitous (that is, unexpected or
unintended) in nature, that damage or destroy property.
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