Insurance explained - what is a sum insured?

Insurance companies can sometimes throw words and phrases around assuming everyone knows what they mean. Here we explain what sum insured is.

Insurance is often provided with a limit on the amount of cover that will be given for any one loss or claim. Also referred to as a limit of liability, a sum insured will be shown on your quote and confirmed on your documents (usually your schedule) when you buy a policy. It’s basically the maximum amount that will be paid out if you claim.
 

You should be careful to ensure that the sum insured provides you with the cover you need should the worst happen and you need to make a claim.
 

A sum insured might apply to the whole policy overall - so £50,000 for home Contents as an example, and/or individual items limits such as a watch specified at £5,000; or £250 for hotel expenses on car insurance.

The sum insured is generally set at new business and reviewed at renewal or if you choose to make a change to your policy during the year, such as adding a new specified item on home Contents. Some home insurers will ask you to value all your contents and give you a policy that covers that limit as your sum insured, whilst others will provide a blanket ‘up to’ sum insured.