Fire Consequential Loss

This policy covers you for loss of Gross Profit due to reduction in turnover and increased cost of working consequent upon interruption of the your business caused by perils covered under the fire policy.

Basis of arriving at the Sum Insured (annual Gross Profit) :

• Difference Basis
  Gross Profit = The sum to be insured represents the amount by which the sum of the turnover and the amount of the closing stock shall exceed the sum of the opening stock and work in progress and the amount of the *specified (or uninsured) working expenses.
  
  * Specified working expenses or uninsured working expenses are the charges that vary proportionately with the rise or fall in turnover.
  
  Examples of Specified (Uninsured) Working Expenses are :
  
  1. Purchases
  2. Carriage
  3. Packing Materials
  4. Freight
  5. Wages (if to be insured by a separate item)
  Wages (other than salaries which should be included in the Gross Profit sum insured) - It can either be covered in full under the Gross Profit item or insured separately on the following basis:
  
  1. Wages on Pro-Rata Basis
  2. Wages on Dual Basis
  3. Wages and Salaries on Payroll Basis
• Addition Basis
  Gross Profit : the sum produced by adding to the Nett Profit the amount of the insured standing charges or if there is no Nett Profit, the amount of the insured standing charges less the amount of any Nett Trading Loss.

You may extend the basic policy to cover the following (Subject to the Insurer / Insured's agreement and payment of additional premiums):

• Specified Suppliers' Extension
• Unspecified Suppliers' Extension
• Prevention of Access Extension
• Public Utilities Extension
• Infectious or contagious diseases, murder, suicide, pest, food or drink poisoning, or defective sanitary arrangements
• Specified Customers' Extension

Basis of Sum Insured / Indemnity
In considering the adequacy of sum insured on Gross Profit & Wages, it should be borne in mind that Consequential Loss insurance is subject to the same Conditions of Average applicable to Material Damage insurance. In the event of loss, under-insurance becomes immediately apparent with the comparison of the sums insured & the actual Gross Profit & Wages earned in the 12 months period immediately before the damage, suitably adjusted for any trend in the business.

Allowing for a loss occurring at or near the end of the period of insurance and affecting the business in the ensuing Indemnity Period, the sums insured should represent the annual Gross Profit & Wages anticipated during the current year of insurance duly adjusted for anticipated trends in the business and wages structure during the ensuing period of interruption.

Premium Rating (Average Base Rate)
The rate shall not be less than the basic fire and/or perils/clauses rates (including the additional rates for clauses such as Electrical Installation Clause (B) etc for the fire (material damage) insurance for the same perils/clauses on the property concerned.

Indemnity Period
It is the period beginning with the occurrence of the damage and ending no later than the maximum indemnity period thereafter during which the results of the business shall be affected in consequence of the damage. The length of the indemnity period depends on the nature of the business, the ability to obtain other premises and facilities with which the existing premises or contents can be replaced or repaired. The period chosen should be sufficiently long enough to enable the business to recover.