The sum insured in liability insurance is a very important point that you should review when taking out a policy.
Otherwise, you may arrange a policy that is too limited and does not cover all the damage you expected. This will inevitably affect your finances.
What Are Sums Insured in Liability Insurance?
The sum insured refers to the maximum amount that the insurer will assume under the policy you take out.
In other words, there are different amounts that can be insured. If the damage caused exceeds the insured amount, the insurer will not pay the corresponding indemnities above that limit.
For a company, it is important to assess the possible damage and indemnities that could arise.
Otherwise, you could find yourself with an insufficient policy or an excessively high policy. The ideal is to find the right balance so that you do not overpay and remain fully protected.
How Do They Work?
The way the sum insured works is relatively simple. If, for example, your policy covers you up to EUR 70,000, that is the maximum amount the insurer would pay if you caused damage to third parties.
If your liability finally required an indemnity of EUR 100,000, you would have to pay the remaining EUR 30,000 yourself.
Because these amounts are not small, special attention must be paid when arranging liability insurance that matches the level of indemnities you could face. Otherwise, in many cases this could lead to significant debt.
What Is the Difference Between Insured Capital and Sum Insured?
In reality, there is no difference between sum insured and insured capital. Both are synonyms and refer to the maximum amount the insurer will pay if a claim or accident occurs.
This does not only apply to liability insurance; this terminology is also used in other types of insurance.
When reviewing insurance policy contracts, it is important to look for one of these two terms.
How Do You Know the Sum Insured or Insured Capital?
Normally, the professionals advising you will tell you this amount before you sign any document, especially if you work with a professional insurance brokerage. However, if they do not tell you, or if you are not completely sure, the best option is always to check it.
Therefore, in the policy contract you are going to take out, do not hesitate to look for the sum insured or insured capital. Only then can you make sure that the maximum amount your insurance will cover is sufficient for any expense deriving from your activity.