Page 299 - Fire Insurance Ebook IC 57

The Insurance Times

Steps to calculate claim payable under
Consequential Loss Insurance

Step one : Find the rate of gross profit - = GP%
gross profit of previous year

turnover of previous year

Step two: Find the reduction in turnover - Standard turnover -
Turnover in indemnity period

Step three: Find initial claim amount : Apply the rate of gross
profit on the reduction of turnover.
GP% x Reduction in Turnover

Step four: Add additional expenditure:
There may be two possibilities. The additional expenses/standing
charges incurred are fully insured or it may not be fully insured.
Apply average condition on the additional expenditure as given
below

Net Profit + Insured Standing Charges
X Additional Expenditure

Net Profit + All Standing Charges

The resulting amount will be added to initial claim amount.

Step five: Check whether additional expenditure is not more
than the rate of gross profit applied on reduction in turnover.

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