Page 344 - Fire Insurance Ebook IC 57

Fire and Consequential Loss Insurance

method had been used, he would not have got any
payment as there would not have been any shortage
of turnover.

However, TAC has introduced Alternative Basis Clause,
which allows the insurer to choose either of the terms '
turnover' or 'output', depending on the situation, provided
only one such meaning shall be operative in connection
with any one occurrence of damage.

Thus, output basis is useful in the following
circumstances:
(i) When one or more standard products are

manufactured, and where each unit of production
can be said to earn a regular proportion of gross
profit.
(ii) Where there is efficient cost accounting system to
determine the overall cost per unit of production.
(iii) When a factory is working at a constant rate of
production, if sales show a definite seasonal
tendency, or is liable to fluctuations.
(in) Where there is appreciable time lag between

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