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Fire Loss of Profit Insurance tends to address this important business requirements. It covers Loss of Gross Profit and /or increase in cost of working due to reduction in turnover/output due to operation of peril covered in the Standard Fire & Special Perils Policy. Only essential pre-requisite of this Insurance is that there must be in force a Standard Fire & Special Perils Policy covering the risk.
Any business enterprise can have this insurance in addition to Standard Fire Material Damage Insurance and enjoy benefit of total insurance protection against any perils covered.
Claims amount get reduced proportionately In relation to Sum Insured/ Value at Risk
Properties or machineries should be insured for market value or replacement value to be considered as on the date of loss (Not on the date of insurance) to avoid average clause
Adequate Sum Insured to be taken after Valuation
In a manufacturing plant short circuiting in a heavy machine due to which the claim was denied by the Insurance company
Asset in which the short circuiting has originated is not covered as per the domina clause provision under policy terms and conditions.
Exact smaller part from which the shortcircuiting had occurred was identified. This resulted in the increase in the claim amount because the cost of the smaller part was only disallowed.
Critical machines to be covered under both Fire and Machinery Break Down Policy so that this exclusion is not applicable and there is a resultant increase in the claim amount.
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