Loss of Profits Following Machinery Breakdown - customer
Covers the actual loss of profits as a result of a business interruption caused by material damage indefinable under machinery insurance. A loss due to an interruption or interference of business operations is made up of the following factors: a) the reduction in operating profit i.e. the profit from selling the goods produced and traded by the Insured and from rendering services; b) the standing charges i.e. costs incurred entirely or in part if operations are interrupted or impaired. These include wages and salaries, interest, economic depreciation, basic rates for third party energy, expense for upkeep of buildings and machines, rent, taxes and other non-specific working expenses, insurance premiums etc.
Sum Insured is made up of the operating profit and the standing charges in the course of twelve successive calendar months (i.e. normally the business year). It is recommended to load the Sum Insured to take account of probable trends in the Insured’s business during the financial year following the current period of insurance (to avoid under insurance).
Insurance Period/Indemnity Period
An indemnity period is also required and this will be the maximum time which the Insured anticipates his business will be interrupted following a loss. Usually the period will be three, six, nine or twelve months, although longer periods are possible