First Loss Insurance (insurance on first loss)

In the case of first loss insurance an insured claim is paid out up to the amount of the sum insured without taking into consideration the possible insurance value. There is no additional obligation (second risk) to pay out the claim extending to the sum insured. The advantage of first loss insurance is that claims are regulated in a simple way, since only the amount of the actual claim is required to be reported, without checking whether an item has been underinsured, rather than also needing to check the insurance value of undamaged items.