What is sum insured / policy limit?

The sum insured is calculated depending on the insurance policy you are considering purchasing.

In the case of health insurance, the sum insured may be determined based on factors such as the insured person's age, health status, pre-existing conditions, and medical history, as well as the specific coverage options selected.

In car insurance, the sum insured is calculated based on the model and brand of your vehicle, the estimated cost of car repair, spare parts cost and availability, driver profile and much more.

Sum insured or policy limits matter for several reasons:

Protection - Policy limits give you financial security in case an unfortunate event occurs that is covered in your policy. Instead, your insurance company is responsible for paying out your claim.

Affordability - Policy limits also affect the affordability of insurance premiums. Higher policy limits result in higher insurance premiums, respectively lower policy limits are more affordable.

Compliance - Policy limits are often mandated by law or regulation. For example, drivers are required to purchase minimum liability insurance coverage for bodily injury and property damage.

Risk management - Policy limits are adjusted by underwriters based on assessing the risk associated with a particular policyholder or type of policy.

There are four common types of policy limits:

• Liability limits - Liability limits are the maximum amount that an insurance policy will pay out for a covered insurance claim if you are at fault in an accident. The liability limit is written in numbers. For example, 400,000 THB/ 1,000,000 THB. Maximum coverage of damages to your car 400,000 THB, while bodily injury is covered up to 1,000,000 THB.
• Deductible limits - Deductible or insurance excess is the amount that you are responsible for paying out of pocket before your insurance policy begins to cover the remaining costs. For example, if you have a 1,000 THB deductible on your auto insurance policy and you have 5,000 THB in damages from an accident, you would pay the 1,000 THB first and your insurance company would cover the remaining 4,000 THB.
• Aggregate limits - Aggregate limit is a maximum amount that an insurance policy will pay out over a specific period of time. For example, if you have a liability insurance policy with an aggregate limit of 1,000,000 THB, this means that the policy will pay out up to 1,000,000 THB in claims over the policy period, regardless of the number of claims made.
• Occurrence limits - Occurrence limits refer to the maximum amount that your insurance company will pay out for a single insured event. For example, if you have a car insurance policy with an bodily injury liability of 1,000,000 THB per person per accident occured, this means that the insurance company will pay out up to 1,000,000 THB for every single incident or occurrence.

“Sum insured” is a term that is used in health insurance, car insurance, property insurance in the event of a covered loss or claim. The sum insured is determined before you purchase an insurance policy.

On the other hand, "sum assured" is used in life insurance policies. It is the amount of money that the insurance broker guarantees to pay out to the beneficiaries in the event of the policyholder's death. The sum assured is agreed upon at the time you buy a life insurance policy, the amount is determined based on factors such as the policyholder's age, health status, and income.