The Loss of Profits Policy is formulated to cover the likely monetary loss occurring frombreak in business activity that may arise due to physical loss of property by an eventcovered for insurance.
What is Fire Loss of Profit Insurance ?
Fire Standard & Special Perils Policy covers only the material damage, financial loss caused to your property covered under the Policy by Fire or by any of the Special Perils covered under the Policy like Flood, Storm or by Riot, Strike & Malicious Damage. But due to this, your Business enterprise, be it a shop or godown or industrial unit etc may have to suspend its normal business activities thus causing reduction in your turnover or you may have to incur certain additional expenditure for keeping normal operation of your business activity maintained. These Consequential losses are NOT covered under Fire Standard & Special Perils Policy.
Fire Loss of Profit Insurance addresses 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 perils 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.
What is the benefit of this Insurance?
This insurance together with Standard Fire & Special Perils Insurance provides you total protection against operation of any of the perils covered; be it a Fire damage or a Flood/Inundation damage etc.Even if the Fire Material Damage coverage is adequate and the claim settled on reinstatement value basis the insured still has other losses which may ruin him. These losses are the loss of business and financial loss as the consequence of operation of the peril and it may be larger than the material damage loss.
Fire Loss of Profit Insurance covers the below mentioned losses