What Are The Key Features Of Loss Of Profit Policy?

3 min read

Loss of profit insurance is a valuable protection for many businesses. This article will discuss the key features of this type of insurance. If you are looking to protect your business against financial losses, then a loss of profit policy may be right for you. Read on to learn more about the policy’s benefits and drawbacks before deciding whether or not it’s worth getting coverage!

Key Features of Loss of Profit Policy

1. Coverage

The last thing you want to think about is how your business will survive after a fire, flood, or other perils destroys it. You’ll need to deal with the consequences not only of rebuilding and repairing damaged assets but also of losing out on profits while your company operates in downtime. The loss can be devastating for any company when their livelihood depends on the successful operation of their business. However, with the right coverage through a Loss of Profit Policy, one can have peace of mind knowing that losses incurred due to such perils will be covered by insurance! The best way to find out what your options are is by understanding the different types of benefits available, which are outlined below.

  • Deficit of Net Trading Profit
  • Loss of Wages
  • Standing Charges
  • Increased Working Cost
  • Fees of an Auditor

2. Extensions

If you’re looking to purchase a Loss of Profit Policy, it’s important to understand the different extensions that are available. With the standard Loss of Profit plan, three major Extensions are offered:

  • Inadvertent failure of public electricity, water supply, or gas;
  • Damage to the customer’s premises as a result of hazards covered by the Fire Policy; and 
  • Damage to the Supplier’s premises as a result of hazards covered by the Fire Policy

Extensions are a great way of increasing coverage of insurance by adding a small amount to the annual premium. 

General Exclusions

It is important to understand the general exclusions of an insurance plan at the time of purchasing one. It helps reduce the chances of getting claims rejected. The general exclusions to the Loss of Profit policy are:

  • Deficit of Gross Profit
  • Difference between Stock Value before fire and replacement
  • After-fire degradation of surviving stock
  • Goodwill loss
  • Claims of third-parties

Also Read: Fire Loss of Profit Insurance Policy: Coverage, Benefits & Formula

Conclusion

The last thing any business owner wants is to suffer a loss of profit or be forced out of business due to an unforeseen incident. However, when you’re in charge of managing your own company’s finances and operations, it can be difficult to find the time needed to balance all aspects of running a small business with protecting yourself from disasters like fires and other catastrophes. If this sounds like you, loss of profit policy products can bring affordable protection for your company by providing coverage that will make sure if anything unfortunate happens – even if it’s something outside your control- you’ll have peace of mind knowing your finances are covered. However, you should compare insurance plans before purchasing one for your company. It ensures you are getting the best deal on your budget.

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Gayatri Prabhu, Head-Digital Business at Mahindra Insurance Brokers Limited (MIBL) is one those few digital leaders who has the width and depth that is required to execute an ROI driven holistic digital strategy. She cuts through the noise, identifies the critical levers and leads her team to successful execution of the defined strategy. Her core mantra to win new and retain existing customers is: understand the consumer behavior and craft experiences around it.

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