Page 309 - Fire Insurance Ebook IC 57

The Insurance Times

So, in other words, the rate of gross profit is the
normal earning power of the business expresses as
a percentage.

Actually, the measure of the indemnity is the sum
produced by applying the rate of gross profit to the
reduction in turnover during an agreed period
following the fire. When rate of gross profit is applied
to the shortage in turnover, the amount of trading
loss is ascertained.

In the above example, the rate of gross profit 30%
is applied to the reduction in turnover Rs.25,00,000
which produces Rs. 7,50,000 which is payable under
the Policy.

(c) 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,

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