If there is no possibility of total loss, the Sum insured is arrived at based on the maximum loss that is likely to occur at any one time on first loss basis. For e.g. theft of huge machinery, bulk drugs, works of art etc. The difference between insurance on full value and first loss basis is that in case of the former, if the losses exceed the Sum Insured, the condition of average will apply whereas in case of first loss sum insured, even when the loss exceeds the sum insured, the liability remains upto the agreed Sum Insured without applying condition of average. E.g. A burglary insurance policy against Fixed Plant and Machinery of enterprise can be taken on First loss basis.