Advance Loss of Profit Insurance Policy
Factory operations stand the risk of delays due to damaged machinery. This damage to machinery not only hampers operations but also leads to loss of profit. The Advance Loss of Profit Insurance is a protecting solution that is designed to cover losses occurring due to delay / halt in operations. This protecting solution is designed for Principles and needs to be concurrent with Material Damage Project Insurance.
The Advance Loss of Profit Insurance Policy has the following features -
- Loss of profit due to reduced turnover
When a company loses on net profit due to reduction in its turnover and this reduction is caused due to damaged machinery – an Advance Loss of Profit Policy will cover the costs borne by the business.
- Increased cost of working
Damaged machinery could lead a business to resort to using manual labour – which will cost a lot more to a business than usual. An Advance Loss of Profit Policy will cover such extra expenses.
- Standing charges
Even though operations might have stopped due to material damage, a business will have to pay standing charges which will continue to accrue in spite of business interruptions. These include factory rent, wages etc. An Advance Loss of Profit Insurance Policy will be able to cover such additional costs.
- Any additional expenses
Any other expenses that may be necessary to maintain a working factory or a normal business are covered by an Advance Loss of Profit Insurance Policy.
What is not covered under an Advance Loss of Profit Insurance Policy?
An Advance Loss of Profit Insurance Policy does not cover the following damages –
- Damages to surrounding property
- Damages caused due to restrictions imposed by a public authority
- Losses due to non-availability of capital
- War and Nuclear Perils
Sum Insured and Premium
The sum insured for the Advance Loss of Profit Insurance Policy is determined by the estimated gross profit numbers shared by the policy holder. This policy also factors in the indemnity period to determine sum insured. Premium rates on this policy is based on the cost of material damage after applying risk factors like coverage, deductibles, site location and nature of occupancy.