- The Standard Fire and Special Perils Policy as well as Machinery Insurance Policy, specifically exclude ‘Loss of earnings’, which is a consequential loss.
- If business carried on at the premises is interrupted because the insured property is destroyed or damaged by any of the perils covered under the Fire Policy or Machinery Insurance Policy, the business suffers loss of gross profit for the period of interruption.
- You need Consequential Loss Policy in order to remain in the same financial position as you were prior to the outbreak of fire or machinery breakdown.
BUSINESS INTERRUPTION INSURANCE
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BUSINESS INTERRUPTION INSURANCE
ABOUT
All Industries need this insurance in conjunction with Standard Fire and Special Perils Policy (SFSP)/ Machinery Insurance Policy. For any claim under this policy, a physical loss claim should have been admitted under the said SFSP or Machinery Insurance Policy.
Sum insured shall represent the annual gross profit, which is ascertained either by “Addition Method” or “Difference Method”. Under “Addition Method”, the annual gross profit is determined as the sum of the net profit (before tax) and the standing charges you wish to cover. Under “Difference Method”, annual gross profit is determined as the difference between the turnover and the variable charges.
In case of loss resulting in interruption, Insurance offers indemnity in respect of gross profit lost during the interruption period. Insurance also covers increase in cost of working of the business during the period of indemnity (from date of loss/damage to date in which business results return to normal). In case of certain industries, loss of gross profit could be measured by ascertaining loss of output during the interruption period in order to determine indemnity
This is a premises based insurance, therefore, if more than one location needs to be covered, the said locations to be listed in the policy. Period of Insurance is one year, renewable every year. However, period during which the business is expected to be interrupted consequent upon the unfortunate event, could be insured up to 36 months.
BUSINESS INTERRUPTION INSURANCE
BENEFITS
- This is a premises-based insurance. If the business has more than one location, all locations must to be listed in the proposal.
- Debt Charges could be covered as Standing Charges.
Add On Covers
- Prevention of access due to perils covered under SFSP/Machinery Insurance could be covered.
- Interruptions due to all add-on covers under SFSP/Machinery Insurance could also be covered.
- Interruptions due to damages to Customer’s/Supplier’s premises as well as damages to Public Utilities, Water works and Electric Stations could be covered.
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