For the sample case, we take a fire insurance which has 2 (two) policies. First policy issued by X Insurance Co. and the other issued by Y Insurance Co. The trade of insured business is retailer of electronics goods like television, air conditioner, refrigerator, etc. The detailed sum insured for 2 (two) policies above is as follows :

Sum Insured  X Insurance Co. Policy Y Insurance Co. Policy

-Building USD 20,000.00 USD 10,000.00

-Stock-in-trade  USD  4,000.00 USD 6,000.00

Based on the spot investigation, claim analyst or loss adjuster reported that the cause of loss was fire due to short circuit. The insured propose a claim as much as USD 20,000.00 for building loss and USD 3,000.00 on stock-in-trade loss. The value of USD 20,000.00 was considered from building condition after loss which was not stable anymore and need to be rebuilt after the fire damage. For further information, the building was built in 2002 and loss damage happens in 2007. Meanwhile, the stock-in-trade is a new items. So, how we can calculate the actual loss and respective liability for each insurance company ?

First, we need information about construction index based on local price. In Indonesia, we can find such index from the Local Construction Guidance Book issued by National Planning Board and Finance Department. Second, we calculate the sound value of the respective items. If assumed that for 100 m² loss of building need cost USD 100.00/m², so the sound value of the building is 100 m²  x USD 100.00/m². Depreciation value is assumed by 10% for 5 year period.  Then, the sound value of building is 100 m² x USD 100.00/m² – (10% x100 x 100) = USD 9,000.00. This value is lower than proposed value by the insured because the insured made a claim without considering adjusted construction index and yearly depreciaton. 

For the loss on electronic goods as stock-in-trade, we need information on stock declaration in every months and compared with damaged items found while taking a claim investigation. If the items is new condition, no depreciation will be made. And with assumption that the actual loss for stock-in-trade is same with the proposed value by the insured, we can calculate loss based on the formula bellow :

Building :

X Contribution =  Sum Insured X  x Loss

  Sum Insured X + Sum Insured Y  

 =  USD 20,000.00  x USD 9,000.00

  USD 20,000.00 + USD 10,000.00 

 = USD 6,000.00

Y Contribution =     Sum Insured Y  x Loss

   Sum Insured X + Sum Insured Y  

=  USD 10,000.00  x USD 9,000.00

  USD 20,000.00 + USD 10,000.00 

 = USD 3,000.00

Stock-in-trade :

X Contribution =  Sum Insured X   x Loss

  Sum Insured X + Sum Insured Y  

 =  USD 4,000.00  x USD 3,000.00

  USD 4,000.00 + USD 6,000.00 

 = USD 1,200.00

Y Contribution =  Sum Insured Y  x Loss

   Sum Insured X + Sum Insured Y  

=  USD 6,000.00  x USD 3,000.00

  USD 4,000.00 + USD 6,000.00 

 = USD 1,800.00

So, the compensation paid by X Insurance Co. is USD 6,000.00 + USD 1,200.00 = USD 7,200.00 and in other side, Y Insurance Co. will pay the insured in a value of USD 3,000.00 + USD 1,800.00 = USD 4,800.00. Total claim payment received by the insured is USD 12,000.00.