Definition of First-loss policy
First-loss policy is a sort of property insurance policy that gives just fractional insurance. In case of a claim, the policyholder consents to acknowledge a sum not as much as the full estimation of damaged, decimated or stolen things/property. Consequently, the backup plan consents to not punish the policyholder for under-safeguarding their products or property.
In a this event, the policyholder does not look for remuneration for losses beneath the first-loss level. Premiums are figured proportionately – meaning they are not in light of the full estimation of aggregate merchandise or property.
Brief Explanation of First-loss policy
In the event that a store proprietor held $2.5 million worth of merchandise in his/her store however just accepted that the most s/he could lose at any one time because of robbery or thievery would be roughly $50,000, s/he may get a first-loss policy for that sum.