This is the most your insurance policy would pay out in the result of a claim.
Let's say your eve policy has a total insured amount of $100k. That means your policy would pay up to a total of $100k for any claim.
The sum insured is important because if this is lower than the actual total budgeted expenses or gross revenue (depending on the type of coverage you choose) of the event, you may be classed as being under-insured.
If this is the case you will only be covered proportionally for any losses to your event, i.e. if your coverage is $80k and your budgeted expenses $100k, you would only receive 80% of any loss claimed for. This is because you are considered to be your own insurer for the $20k that isn’t covered by your policy.
Ok that sounds complex, this is what it actually means.
Let's say your event costs $200k to put on but your policy only has a sum insured of $100k. You would be classed as underinsured. In this instance, because your limit of liability is 50% of the total event cost, you will only receive 50% of any losses incurred. Therefore if you suffered a $50k loss, the maximum amount you could claim would be $25k.
It’s important to find cover that is the right fit for you. If you have any questions please contact us.