# 11. Property and business interruption insurance

URL: https://insurancelawestonia.ee/insurance-law-cpd/property-and-business-interruption/
Author: Dr Olavi-Jüri Luik, Partner, Head of Insurance Law, attorney at law (Advokaadibüroo WIDEN OÜ)
Last updated: 2026-11-11

> CPD module 11: insurable value, sum insured and actual loss, under-insurance and the basic business interruption calculation.

Module 11 of 20 · Theme: Lines of insurance · Level: Specialist · Suggested study time: 90 minutes 

**In short.** This module covers the calculation of property insurance benefits: insurable value, sum insured, under-insurance, limits and the basic calculation of a business interruption loss.

## Learning outcomes

After completing this module you will be able to:

- distinguish insurable value, sum insured and actual loss;
- check the conditions of under-insurance and any special agreements;
- prepare a basic business interruption calculation.

## Key points

### Three different amounts

In indemnity insurance the sum insured is the insurer's maximum payment (VÕS § 426(1)), the insurable value is the value of the insurable interest at the time of the insured event (§ 479(1)), and the insurer need not pay more than the actual loss (§ 477). The payment does not automatically equal the sum insured; sub-limits and the deductible must also be taken into account.

### Under-insurance

If the sum insured is lower than the insurable value at the time of the insured event, the insurer is liable for the loss in the proportion that the sum insured bears to the insurable value (VÕS § 482). Before applying the proportion, check the basis of valuation (for example reinstatement value or market value), any first-loss cover and any waiver of under-insurance clause. Incomplete data does not justify an arbitrary percentage reduction.

### Business interruption

A business interruption loss depends on the policy trigger (usually insured physical damage), the agreed financial measure (for example gross profit), the indemnity period, saved costs, increased cost of working and trend adjustments. A fall in turnover is not the same as the benefit.

## Read before the quiz

Articles on this site:

- [Insurable interest, insurable value and sums insured in Estonia](https://insurancelawestonia.ee/estonian-insurance-contract-law/insurable-interest-and-sums-insured)
- [Under-insurance, over-insurance and double insurance in Estonia](https://insurancelawestonia.ee/estonian-insurance-contract-law/under-over-and-double-insurance)
- [Lines of insurance in Estonia: property, BI, liability and more](https://insurancelawestonia.ee/guides/lines-of-insurance-estonia)
- [Major fire and property losses in Estonia: counsel for insurers](https://insurancelawestonia.ee/services-for-insurers/major-fire-and-property-losses)

Legal sources:

- [VÕS §§ 426, 476–489](https://www.riigiteataja.ee/akt/V%C3%95S)

## Practical case

*Write down your own answer before opening the suggested approach.*

After a fire a company's turnover fell by EUR 100,000 during the indemnity period. Variable costs fell by EUR 40,000 over the same period and EUR 8,000 of increased cost of working was incurred to reduce the loss. Calculate the starting figure and state what else must be checked.

Suggested approach

Starting figure: 100,000 − 40,000 + 8,000 = EUR 68,000. The final benefit depends on whether the interruption was caused by insured physical damage (the trigger), whether the fall in turnover falls within the indemnity period, whether and to what extent the increased costs are covered (usually to the extent they reduced the interruption loss), trend adjustments, any sub-limit and deductible (including a time deductible), and whether the sum insured was adequate (VÕS § 482).

## Self-check quiz

Answer the three questions and press "Check answers". An explanation is shown for each question.

The self-check quiz requires JavaScript in your browser.

[← Previous: 10. Motor liability insurance and cross-border accidents](https://insurancelawestonia.ee/insurance-law-cpd/motor-liability-and-cross-border-accidents) · [All modules](https://insurancelawestonia.ee/insurance-law-cpd) · [Next: 12. Liability insurance and the injured party's claim →](https://insurancelawestonia.ee/insurance-law-cpd/liability-insurance-and-injured-party-claims)