What is Loss of the Profit Policy? And What Damages Covered Under this Policy?


2 min read

Every business owner wants to protect their company and ensure it is successful and profitable for years to come. The risk of a major fire or other disasters can be devastating, but there are ways you can help prevent this from happening. One way that many companies choose to guard against such disasters is through purchasing the Fire Loss of Profit policy Policy. This policy will reimburse any losses incurred if your property sustains damage due to any perils covered by the policy including fire, flood, etc. This blog will provide a guide on what is loss of profit policy and its coverage.

What is Loss of Profit Policy?

Risks like Storm, Fire, Flood or man-made disasters like Strike, Riots, and Malicious Damage are insured by the ‘Fire Standard & Special Perils’ Plan. But as a result of such disasters,  your company may have to cease its usual commercial activities, resulting in a decrease in your revenue, or you may be required to invest certain extra expenditures in order to continue the regular function of your business. Loss of Profit Insurance covers these losses that you suffer as a result of fire damage resulting in suspension of operations or increased expenses due to Fire loss.

Coverage of Fire Loss of Profit policy

It’s a common misconception that the only type of insurance you need for your business is liability coverage. While this is important, it doesn’t protect against all risks. You may be subject to a loss of profits due to fire damage or another covered peril and not have any protection. If you’re looking for an affordable way to ensure your company stays afloat in the event of a disaster, it is important to get a Fire Loss of Profit policy. The coverage includes:

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

General Exclusions

You’ve taken the time to get your Fire Loss of Profit policy plan in place, but have you read all of the fine print? There are a few general exclusions under these plans that could leave you with some unexpected costs. Here is a list of popular exclusions for this type of business insurance policy:

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


It’s important to take the time to consider your business insurance needs. If you’re a small business owner who is looking for an affordable way to ensure their company stays afloat in the event of a disaster, fire loss of profit coverage may be exactly what you need. It will ensure that in the event of an unfortunate incident like a fire, your business can recover quickly without any interruption in operations. This blog will provide details on what is loss of profit policy is and its coverage so you have an easier time when you compare insurance plans.

Oct 27, 2021
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PayBima Team
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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