Fire Loss of Profits Insurance Policy

  •  About Policy 
  •    Scope of Cover 
  •    Optional Extensions 
  •    Other Salient Features 

About Policy

When a fire occurs or any of the other perils covered under the  Standard Fire & Special Perils Policy(Material Damage Policy) occur, the material damage policy will help the insured in reinstatement/ repair/replacement of the damaged building, plant & machinery and stock. The time period between the date on which the loss occurs and the date on which the entire reinstatement/repair/replacement is complete and normal production restarts, is called the 'Period of Interruption'. This would result in a reduction in turnover, causing subsequent loss of profits. The intention of a Consequential Loss (Fire) Policy is to make good of this loss.

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Scope of Cover

The consequential fire policy covers

  • Loss of gross profit due to reduction in turnover/output.
  • Increase in cost of working- this is the additional expenditure that has to be necessarily incurred in order to avoid or diminish the reduction in turnover.

The basic requirement is that the loss of gross profit and/or increase in cost of working has to be as a consequence of an insured peril under the material damage of the Fire and Special Perils Policy.


Optional Extensions

The consequential fire policy covers

  • Wages-dual basis or pro-rata basis
  • Lay-offs, retrenchment compensation and notice wages liability
  • Auditor's fees
  • Extension to cover supplier's premises
  • Extension to cover customer's premises
  • Insured's property stored at other situations
  • Extension to cover loss due to accidental failure of public electricity/gas/water supply
  • Spoilage consequential loss cover

Other Salient Features

The consequential fire policy covers

  • For admitting any claim under Fire Loss of Profit Insurance, it is a pre-requisite that the material damage claim for the said loss event is admitted under Standard Fire & Special Perils insurance.
  • Coverage and rating is as per the Material Damage Policy.

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