Business Interruption Insurance protects the cash flow and profits of the business. The insured aims to be placed into the same situation after losing that they would have been in if the loss had not occurred. Insurance deals with the loss of earning power consequent upon damage/ destruction to the capital assets/stocks. Thus, the subject matter of lop Insurance is the business of the insured.
Items of expenses can be divided into-
1) Variable charges- which vary in proportion to the volume of business.
2) Standing charges- fixed in nature, irrespective of the volume of business transacted.
Fire consequential loss policy provides cover for expenditures and increased cost of working because of business interruption following a loss covered under fire Insurance. The claim under this policy is payable only if the liability under the Material Damage Policy is established.
Machinery Breakdown Loss of profit offers a solution by covering profit lost due to reduced turnover arising from business interruption following damage to the machinery insured. MB Loss of profit Insurance can be availed only in conjunction with Machinery Breakdown Policy.
Any delay in the start up of a project would instantaneously cause a loss in anticipated revenue. Therefore, stringent conditions regarding delays in scheduled project completion are commonplace in contracts between financiers and principals, particularly those between principals and contractors. Principals are, therefore, under pressure to ensure the commercial viability of the projects by generating revenue following the scheduled completion date.
Delay in Startup Insurance (also known as Advance Loss of Profits Insurance) offers the broadest possible Insurance cover available in the market to meet such contingencies. While opting for Storage Cum Erection Insurance / Marine Cum Erection Insurance, DSU as an extension is advisable.
