When buying an insurance policy and looking at its terms and conditions, many people have questions: "what is the sum insured?", "what is the insurance premium?" and how they differ. Below, we'll go into more detail and describe a few points.
Concepts and definitions
The sum insured is the amount of liability of the insurance company in the event of insured events under the contract.
Insurance premium is the cost of an insurance contract or policy paid by the client.
The main difference is that the sum insured is the maximum amount of coverage under the insurance contract, and the insurance premium is the cost of insurance for the client.
Where do the sum insured and the premium meet?
Usually, each type of insurance has both the sum insured and the premium, but in different products it can be either fixed or at the client's choice. For example, when insuring an OSAGO, the sum insured is fixed in accordance with the Law of Ukraine and is determined by this law. And when insuring a car under CASCO, the sum insured depends on the market value of the car. Similarly, travel insurance contracts have a fixed sum insured and in most cases amount to 30,000 euros.
Each type of insurance costs a certain amount, which is set by an individual insurance company for compulsory and voluntary insurance services.
Insurance payment - how is it paid?
An insurance benefit is the amount paid by an insurance company for each insured event under an insurance contract.
Usually, the insurance payment depends on the circumstances and is calculated according to official documents. In the case of a doctor's visit, it is based on receipts, and in the case of car insurance, it is based on the insurance company's calculation or on the invoice from the service station.