Page 302 - Fire Insurance Ebook IC 57

Fire and Consequential Loss Insurance

(b) Standing Charges : These are overhead expenses
such as salaries, taxes, interest, etc which have to
be incurred in spite of stoppage of business.

(c) Increased cost of working : This is the abnormal
expenditure incurred by the Insured to maintain the
businesses, as far as possible, at its normal level, so
that the loss under net profit and standing charges
are avoided or minimized.

E.g, rent for temporary premises, payment of
overtime, rent of machinery, sub-contracting etc.

Whereas the subject matter of fire insurance is material
property, the subject matter of profits insurance is the
business of the Insured, i.e the earning capacity of the
property.

Q3. Define and discuss with the help of examples
the following:-

Ans. (a) Net profit - The Net Profit is the turnover minus
variable and standing charges.

(b) Insured Standing Charges - These expenses
are fixed expenses irrespective of the volume

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