Jane Smith borrows a boat worth $1300. The boat is stolen from her garage and Smith reports the theft to the police and the insurer. The adjuster agrees the boat is covered but is subject to the $1000 limit and further subject to the $250 deductible, making recovery under the policy $750. Smith argues that the deductible applies to the $1300 loss, and the $1000 limit is then applied. Who is correct?