Insurance Law/First Loss


Hi Kevin,

I have just started a while ago studying Insurance.. and I have a question that seems very tricky for me:
When dealing with First Loss policy, how do I calculate the payed amount of any claim?
lets say the loss equals 100,000
and the first loss amount is 500,000
but in the loss date the actual value of the property was 1,000,000

should I pay the whole amount if it is less than 500,000
or should I consider it an underinsurance and I apply the average condition?

Thanks in advance,
S :)


Best of luck in your studies.

I have to admit that I am somewhat confused by your question. ???

It sounds like you are talking about the "co-insurance clause" and the principle of "insured to value". Is that correct?

If that is the case, the clause only applies if the property is UNDERINSURED. If it is over-insured, it only becomes an issue if there is a total loss by any peril other that fire generally. (Many policies have a provision that a total loss by fire will be considered a liquidated demand for policy limits.)

Let me know if it is the co-insurance issue that you are working on and I will send you some good information on that.

Kevin Hromas
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Kevin Hromas


I am a licensed, executive general adjuster currently holding a Texas resident P&C license (614250), New Mexico non-resident all lines license (248774), Oklahoma non-resident P/F/M license (A299561), Florida non-resident P&C license (E117051) and a National Flood Insurance Program certification (06040100). My areas of expertise involve property and casualty issues in both residential and commercial policies with regards to claims practices and issues. I deal extensively with Lloyd's of London commercial policies and various domestic carriers for residential policies.


After a 20 year career as a General Contractor, I was employed by Allstate Insurance as an adjuster in Texas, holding various postitions within the property claims department. After leaving Allstate, I specialized in handling losses associated with major catastrophes through-out the country. (Hurricanes Isabel, Charlie, Wilma, Katrina, Ike, etc., hail storms, floods.) I am currently retained as an expert by multiple insurance defense firms in Texas for issues in litigation. I am also a certified Umpire for formal appraisals.

Member - Society of Registered Professional Adjusters Fellow - Council on Litigation Management Member - Property and Casualty Association Member - Texas Independent Insurances Adjusters Association Member - National Association of independent Insurance Adjusters Member - Houston Claims Association

Claims Magazine ( and then search 'Kevin Hromas' for a full listing of articles and quotes.),,

JD - University of Houston Law Center - 1992 BA - Southwest Texas State University - 1980 AA - South Plains College - 1977 PLCS - Personal Lines Coverage Specialist

Past/Present Clients
Certain Underwriters at Lloyd's, London, Fulbright & Jaworski (Law Firm), Bracket & Ellis (Law Firm) Thamm & O'Briant (Law Firm) Sheehy, Ware & Pappas (Law Firm) Walker, Wilcox and Matousek (Law Firm) Financial Guarantee Underwriters

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