Property insurance


Business Interruption / Loss of Profits Insurance

 

Loss of Profits policy is intended to cover loss of “Gross Profit” following material damage as a result of fire, lightning, storm, hurricane, earthquake, volcanic eruption, flood, impact damage, etc (or other insured peril) at your premises.

 

This policy operates only when there is an admissible claim under the property material damage policy (Fire or PAR Policy )issued by us.

 

Subject to certain limitations, this includes additional expenditure which is incurred for the sole purpose of avoiding or reducing a reduction in turnover.



Product Details


In simplest terms the Business Interruption Policy is designed to restore the business to the same financial position as if the loss had not occurred.

 

To obtain Loss of Profits, it is always essential that you have a Material Damage policy in force, covering your premises for the same period.

 

The business must be interrupted due to happening of an insured peril, beyond the time excess applicable under the policy. The interruption period starts from the date of the loss and extends to when the business’s turnover and profit levels are back to where they would have been but for the loss. There is a limit set on this interruption period and termed as the ‘Indemnity Period’ which is chosen when the cover is taken out and is recorded in months.

 

1) You must maintain proper records of raw materials / stocks, production, sales and income for atleast 2-3 years to ascertain your turn-over, costs and profits made. Such records should be substantiated by a duly audited balance sheet for the previous year/s.


2) You are required to insure the GROSS PROFITS (GP) on the basis of previous years or on the basis of PROJECTED profits for the year, if your business is newly established. The GP shall include the following components:
a) All standing charges –such as staff salaries and cost, rents, government and other departmental fees, interest on loans, bank charges etc. etc.
b) Net profit made after off-setting the standing charges.
c) Increased cost of working, if any.

For assessing Loss of Profits and Actual Financial Loss, the following are taken into consideration :
a) Reduction in Turnover as compared to same period in the previous year.
b) Proportionate standing charges incurred during the period of interruption.
c) Increased cost of working.
d) Net Profits lost.

 

Some of the Exclusions are as below :

 

1. Willful negligence of insured.
2. Spoilage of raw material by other causes.
3. Restrictions imposed by Legal Authorities.
4. War and Allied Perils including nuclear risks.
5. Intangible losses such as loss of goodwill, loss of contracts and customers etc. etc.

 

How to purchase?

 

For detailed information,

Call toll free : 800(628873) - Ext 123

email: property@oicgulf.ae