Page 310 - Fire Insurance Ebook IC 57

Fire and Consequential Loss Insurance

replacement of the machinery etc. Other relevant
factors are the nature of the business, alternative
facilities available for carrying out the business etc.
The Insured should choose the longest possible
indemnity period which would enable him to stabilize
his business following a serious fire.

The period of insurance though is one year, if the
fire occurs during the period of insurance, the
indemnity period may well extend beyond the expiry
date of the insurance.

(d) Sum Insured - The Sum Insured is to be computed
from the Insured's accounts, e.g, Trading and Profit
and Loss accounts. There are several steps to be
followed :

(i) The first step is to identify the Standing Charges
and individually specified in the proposal form. What
is a Standing Charge has to be decided in context
with the business.

(ii) The second step is to ascertain the Net Profit.

(iii) The third step is the calculation of the sum insured.

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