Insurance Encyclopaedia

Sum insured

A sum insured is the maximum amount that your insurer will pay if you make a claim for a covered event.

How is my sum insured determined?

The way your sum insured is calculated depends on the type of insurance you’re buying. In the case of car insurance, your insurer will calculate your sum insured for you based on your car's make, model and age and whether they insure your car for retail, trade or market value. In the case of home contents and building insurance, you set the value you want to insure your home contents or building for. To choose this value, you need to calculate the replacement value of your stuff, i.e. how much would it cost to buy all your stuff new, today.

Should I regularly update my sum insured?

Insurers will typically update your sum insured automatically for certain types of insurance. For example, they can track the replacement value of your car themselves, but for other types of insurance you are expected to update the sum insured yourself. It would usually be a good idea to do this at least once a year as the price of replacing your things will go up at least as inflation does. If you are with Naked, you can update your sum insured yourself on the app.