# Estonian Supreme Court: insurable value and indemnity URL: https://insurancelawestonia.ee/supreme-court/indemnity-insurable-value-and-calculation/ Author: Dr Olavi-Jüri Luik, Partner, Head of Insurance Law, attorney at law (Advokaadibüroo WIDEN OÜ) Last updated: 2026-11-09 > Estonian Supreme Court (Riigikohus) case law on insurable value, under- and overinsurance and calculating the indemnity, in English. This page is part of the [overview of Estonian Supreme Court insurance case law](https://insurancelawestonia.ee/supreme-court). It collects 9 decisions of the Civil Chamber of the Supreme Court (*Riigikohus*) on this topic, in chronological order, with a short synthesis of the direction of the case law. The summaries are written in our own words; the judgments themselves are available in Estonian only. Abbreviations and citation conventions are explained on the [overview page](https://insurancelawestonia.ee/supreme-court#how-to-use-this-overview). ## Synthesis The purpose of indemnity insurance is to restore the insured to the position before the insured event (VÕS § 476(1)). From this the Supreme Court has derived that loss to a building is calculated on its building value even if the insured does not rebuild; that linking the indemnity to reinstatement requires a clear agreement; and that the indemnity may include increases in construction prices after the insured event to the extent that they are reflected in necessary and justified reinstatement costs incurred within the reasonable time needed for reinstatement. The provisions on insurable value (VÕS §§ 479-480) are default rules. Proportionate indemnity for underinsurance (VÕS § 482) presupposes that the sum insured is lower than the insurable value; where the sum insured is agreed as reinstatement value, there is no underinsurance. In overinsurance the insurer may rely on limiting the indemnity to the actual loss without first reducing the sum insured. In insurance of a collection of items the items need not be listed in the contract, but the insured must still prove the composition and value of the loss. ## Decisions ### RKTKo 19.04.2005, 3-2-1-28-05 *Judgment* · paras 18-20 · underinsurance; reinstatement value; proportionate indemnity · *pre-VÕS law* The parties agreed that the sum insured was lower than the reinstatement value. The Supreme Court upheld the formula in the conditions: the indemnity is the loss multiplied by the ratio of the sum insured to the insurable value (here 0.4). The decision applies the Insurance Act in force at the time of the loss, but the principle corresponds to VÕS § 482. [Judgment on riigikohus.ee (Estonian)](https://www.riigikohus.ee/et/lahendid?asjaNr=3-2-1-28-05) ### RKTKo 24.05.2005, 3-2-1-58-05 *Judgment* · paras 16-18 · policyholder and beneficiary; leased property; standing to claim · *pre-VÕS law* A policyholder who insured leased property may in principle demand performance in favour of the third party (beneficiary). The insurer is not released merely because the beneficiary does not claim against it but instead claims against the policyholder under their own contract. The decision applies the former Civil Code. [Judgment on riigikohus.ee (Estonian)](https://www.riigikohus.ee/et/lahendid?asjaNr=3-2-1-58-05) ### RKTKo 18.01.2006, 3-2-1-155-05 *Judgment* · paras 16, 18-20 · home insurance; insurable value of a building; VÕS §§ 479-480; collection of items; VÕS § 476(2) Under VÕS § 479(3) the insurable value of a building is its ordinary local building value less a reasonable amount for age and depreciation; under VÕS § 480(1) and (4) the parties may agree on a fixed amount or on reinstatement cost. These provisions are not mandatory under VÕS § 427. VÕS § 476(2) allows a collection of items to be insured without listing them, but this does not relieve the policyholder from proving the composition and value of the items destroyed. [Judgment on riigikohus.ee (Estonian)](https://www.riigikohus.ee/et/lahendid?asjaNr=3-2-1-155-05) ### RKTKo 20.06.2006, 3-2-1-54-06 *Judgment* · paras 14-16 · motor own-damage; calculation of the indemnity; market value difference; VÕS § 132 as default rule; reliance on nullity VÕS § 132 (compensation for destruction of and damage to property) is not mandatory, so in own-damage insurance the parties may agree on compensation of the difference between the market values of the damaged and undamaged vehicle. The fact that repair costs exceed the pre-loss value does not in itself justify awarding the cost of a new item under the second sentence of VÕS § 132(3). The nullity of a term may be invoked as an argument without bringing a separate claim. [Judgment on riigikohus.ee (Estonian)](https://www.riigikohus.ee/et/lahendid?asjaNr=3-2-1-54-06) ### RKTKo 20.11.2007, 3-2-1-104-07 *Judgment* · paras 12-13 · overinsurance; VÕS § 477; VÕS § 481; reinstatement value The courts erred in holding that, to rely on overinsurance, the insurer should have reduced the sum insured under VÕS § 481. VÕS § 481 gives the parties a right to reduce the sum insured and premiums unilaterally, but the insurer may rely on VÕS § 477 (the indemnity does not exceed the loss) without amending the contract where the reinstatement value of the house is below the sum insured. [Judgment on riigikohus.ee (Estonian)](https://www.riigikohus.ee/et/lahendid?asjaNr=3-2-1-104-07) ### RKTKo 08.12.2008, 3-2-1-113-08 *Judgment* · paras 13-17 · destruction of a building; building value; no reinstatement; VÕS §§ 426, 476, 479, 480 The loss resulting from the destruction of a building equals its building value, and the insurer's liability is unaffected by the insured's unwillingness to rebuild. Linking payment to reinstatement requires a clear agreement between the parties. Since reinstatement value had been agreed as the insurable value and depreciation was 0%, the condition on post-loss damage did not limit the insurer's liability. [Judgment on riigikohus.ee (Estonian)](https://www.riigikohus.ee/et/lahendid?asjaNr=3-2-1-113-08) ### RKTKo 21.09.2016, 3-2-1-57-16 *Judgment* · paras 16, 18-20 · fire in a school building; underinsurance; reinstatement value; VÕS § 480(4) After a fire the insurer alleged underinsurance. The Supreme Court explained that VÕS § 480(4) exceptionally allows agreement that, on reinstatement, age and depreciation are disregarded in determining insurable value; under the conditions reinstatement value applied only if depreciation did not exceed 50%. The chamber agreed with the lower courts that it had not been proved that the insurer knowingly concluded an underinsured contract. The part of the judgment on the broker is under topic 14. [Judgment on riigikohus.ee (Estonian)](https://www.riigikohus.ee/et/lahendid?asjaNr=3-2-1-57-16) ### RKTKo 21.12.2021, 2-18-12360/79 *Judgment* · paras 10-12 · building insurance; rising construction prices; VÕS § 479(1); VÕS § 476(1) The appellate court wrongly held that reinstatement cost must be assessed as at the date of the insured event and that later increases in construction prices are not compensated. According to the Supreme Court, VÕS § 479(1) (insurable value at the time of the insured event) must be read together with VÕS § 476(1), whose purpose is to restore the pre-loss position; the indemnity may therefore include higher prices of construction materials and works at the time of reinstatement carried out within a reasonable time, to the extent they are necessary and justified costs; this does not mean that every later price increase or the cost of improvements is automatically covered. [Judgment on riigikohus.ee (Estonian)](https://www.riigikohus.ee/et/lahendid?asjaNr=2-18-12360/79) ### RKTKo 06.11.2024, 2-22-18155/63 *Judgment* · paras 10-13 · underinsurance; sum insured as reinstatement value; VÕS §§ 426(2), 479(3), 482 Where the parties have agreed under VÕS § 426(2) that the sum insured is the reinstatement value, the sum insured is in substance equal to the insurable value at the time of the insured event and underinsurance (VÕS § 482) cannot arise. The lower courts had calculated a monetary sum insured themselves, without finding that the parties had agreed one, and had not distinguished the sum insured (VÕS § 426) from the insurable value (VÕS § 479(1)). The Supreme Court quashed the judgments to that extent and itself awarded the unreduced indemnity. The judgment concerns a sum insured agreed as reinstatement value; it does not exclude underinsurance where a fixed monetary sum insured below the insurable value was agreed. For the disclosure aspect see topic 1. [Judgment on riigikohus.ee (Estonian)](https://www.riigikohus.ee/et/lahendid?asjaNr=2-22-18155/63) ## Related pages - [Supreme Court of Estonia: overview of insurance case law](https://insurancelawestonia.ee/supreme-court) - [Previous topic](https://insurancelawestonia.ee/supreme-court/nullity-avoidance-withdrawal-termination) - [Next topic](https://insurancelawestonia.ee/supreme-court/subrogation-and-recourse) - [Estonian insurance contract law: overview](https://insurancelawestonia.ee/estonian-insurance-contract-law) - [Glossary of Estonian insurance terms](https://insurancelawestonia.ee/glossary)