Indemnity against loss of Gross Profit
What is Loss of Profit Insurance
The Loss of Profits Policy is formulated to cover the likely monetary loss occurring from break in business activity that may arise due to physical loss of property by an event covered for insurance.
Scope of Coverage
How is it settled?
The indemnity to be paid to the insured is arrived at by comparing the production achieved during the preceding financial year. The policy provides for computation of a standard rate of gross profit (gross profit earned per turnover). This rate of GP when multiplied by the loss in production due to the loss derives the loss payable to the insured.
- Loss of gross profits, which is not consequent upon property damage due to an insured peril
- Loss due to material damage to property, difference between value of stock at the time of fire and the value at the time of subsequent replacement, deterioration of undamaged stock after fire
- Cost of preparing fire and loss of profits claim