Page 304 - Fire Insurance Ebook IC 57
P. 304
Fire and Consequential Loss Insurance
to permanent staffs, etc.
(iii) Net Profit - This is the turnover minus
variable and standing charges.
The following example will illustrate the above
definitions:
Before Fire (Rs) After Fire (Rs)
Turnover 50,00,000 25,00,000
Production Costs 35,00,000 (70%) 17,50,000 (70%)
Standing Charges 10,00,000 (20%) 10,00,000 (40%)
Net Profit 5,00,000 (10%)
Net Loss 2,50,000
(e) Indemnity Period - The profits policy provides
indemnity in respect of loss of gross profits during
the indemnity period which is selected by the insured.
The Insured can choose between 3 months to 3
years as indemnity period, depending on the time
required for reinstatement of the building,
replacement of the machinery etc.
Other relevant factors are the nature of the business,
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