Advance Loss Of Profit Insurance
A Marine-cum-Erection or Contractor's All Risk policy covers physical damage to property & public liability which at best, covers the expenses incurred for repairing or replacing the damaged property and public liability claims if any.
The Advance Loss of Profit is designed to cover:
The policy pays for the actual loss of gross profit incurred during the period of delay, commencing from the scheduled date of commencement of commercial operation upto the actual date of commencement of commercial operation subject to a time excess and indemnity period selected. The delay, however should have occurred due to a claim payable under marine -cum- erection policy, storage-cum -erection policy or contractor's all risk policy.
The policy does not cover delay due to:
Who can take the policy?
The policy is taken by the Principal as he stands to lose in case of any delay in the commissioning of the project.
How to select the sum insured?
The sum insured should represent the Anticipated Gross Profit (i.e.Net Profit + Standing Charges) for the Indemnity Period selected.Net Profit means Business profit before taxation.
Standing Charges means fixed charges incurred even in the absence of business activity e.g. interest charges, salary & wages, Director's fees, O&M costs, activity e.g. interest charges, salary & wages, Director's fees, O&M costs, liquidated damages.
Indemnity Period should be selected keeping in mind the maximum period required for re-importing, re-erecting and/or re-testing any part of the project.