Sum insured
In property insurance, the sum insured is the maximum amount your insurance company will pay in the event that your property is totally destroyed or badly damaged. Rememer that there is no guarantee that the sum insured will be sufficient to cover the costs of regain your property.
Sum insured in a health insurance represents the maximum liability of the insurer during the policy period.
Underinsurance
Under insurance can be defined as the situation where your insurance cover – what your insurance policy will pay out in the case of a loss and subsequent claim, is less than what it would cost to replace the lost items. This obviously means that while your insurance payout will help you towards replacing your losses, you will have to partially fund this replacement.
It could also describe under insurance as the occurrence when there is a shortfall between the amount of cover selected and the actual replacement value of what is being insured. The result is that you will only be paid a proportional part of your claim or in the event of a claim you become your own insurer for the balance of the loss
In conclusion, your property is insured for less than the market value and replacement cost of itself.
Over insurance?
Over insurance can be defined as the situation where an insured has bought so much coverage that it exceeds the actual cash value or the replacement cost of the risk or property insured.
In case of a total loss/damage, the replacement cost is paid out, it is not the sum insured you have purchased. As a result, you have paid exceeded the premium required for your property.
Deductible
Understanding the role deductibles play when insuring your property is an important part of getting the most out of your insurance policy.
A deductible is basically the amount deducted from an insured loss. It can be either a specific money amount or a percentage of the total amount of insurance on a policy. Generally speaking, the larger the deductible, the less a consumer pays in premiums for an insurance policy. Deductible amounts can be found on the declarations page of an insurance policy.
Here is how it works: if you have a $500 dollar deductible, that $500 would be deducted from your claim. So, if your insurance company has determined that you have an insured loss worth $10,000 you would receive a claims check for $9,500.
Deductibles for property damage work differently from health insurance policy, very often they do not apply to liability and health claims.