Page 290 - Fire Insurance Ebook IC 57

Fire and Consequential Loss Insurance

period during which his business could be affected following
a serious fire.

The Sum Insured

n The sum insured is to be computed from the Insured's accounts
e.g., Trading and Profit and Loss accounts.

n The first step is to identify the standing charges in the Insured's
business.

n The next step is to ascertain the net profit of the business. The
total of net profit and the amount of insured standing charges is
the gross profit and the sum insured under the policy. This figure,
which is based on previous financial year's accounts should be
adjusted usually upwards, to reflect the projected future gross
profit expected to be earned.

Examples of standing charges are :-

l Interest on loans, bank overdrafts and debentures, including
brokerage on deposits

l Rent rates and taxes (Tax on profit is included in net profit);
l Duties, licences and patent fees ;
l Director's fees and remuneration;
l Pensions;
l Legal auditing and other professional fees and expenses ;
l Insurance Premiums;
l Advertising and Publicity expenses ;
l Conveyance, Stationery, Postage, telephone, telex, telegram,

teleprinter expenses;
l Motor car expenses

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