Fire Loss and Profit
Popularly known as Fire Loss of Profit (FLOP) and Business Interruption policy. This policy indemnifies against the loss of profit/earning in case of interruption of business due to fire and allied perils. Gross profit is taken/fixed as the sum insured in this policy for an agreed period of indemnity. Loss under this policy is payable only if there is an admissible claim for material damage in Fire policy. In other words, the claim is payable only if the operations of the business are interrupted due to fire or other perils covered in fire policy. Moreover, the period of indemnity is also specified which is the time the company will take to recover out of loss and a maximum period of disruption expected by the Insured. It’s normally taken along with the Fire Policy and it is part also part of IAR and Mega Policy.
Coverage: This policy broadly covers :
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Loss of Gross Profit on account of Reduction in Turnover due to loss/damage of fixed assets by fire and allied perils
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Standing Charges which continue to accrue in spite of stoppage of business by operation of fire and allied perils
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The increased cost of working for avoiding or minimizing the reduction in turnover/output following an event insured in fire policy
Other Notable Points:
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Gross profit is sum total of Net profit and insured standing charges
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The indemnity period is from the date of damage till the business/premises are restored to its position just before the loss or period selected for the policy, whichever is earlier
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Maximum indemnity period opted could be 24 months
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Deductible/excess in this policy is defined in terms of a number of days of standard gross profit.
MAJOR EXTENSIONS AVAILABLE
This policy could be also extended to compensate the loss of Gross profit on account of damages due to fire and allied perils, on payment of agreed premium.
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Supplier's premises
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Customer’s premises
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Failure of Public power supply/Gas works/water works
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Auditor’ fees
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Spoilage Risk extension
GENERAL EXCLUSION
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Losses by perils not covered in Standard Fire and Special Perils policy
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All Exclusions mentioned in Standard Fire and Special Perils policy
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Excess/deductibles mentioned in fire policy
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Inventory shortage
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Loss ofmarket share and goodwill
A-1. Fire and Perril
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Heading Fire and Perill:
Detail Fire and Perill