Introduction:

Modern machinery loss of profits insurance is a suitable means of meeting the increasing need on the part of industry for comprehensive tailor made insurance protection from the consequences of business interruption.

MLOP insurance provides cover for the actual loss of profits sustained as a result of a business interruption caused by material damage indemnifiable under machinery insurance.

Sum Insured

The sum insured is made up of the operating profit and the standing charges (fixed) in the course of twelve successive calendar months. (i.e. normally the business year) Scope of Coverage

Coverage’s are the same as under machinery breakdown insurance. If the loss is admitted under machinery insurance, MLOP will be triggered subject to availability of cover.

Premium rates are broadly determined from the following factors:

• The general and the specific technical risk of the machinery to be insured.
• The effect of machinery breakdowns on the operating profit and standing charges    (factor of relative importance)
• The reserve facilities and spare parts available.

Indemnity Period

This represents the maximum time for which an insurer is liable for the loss of profit. Generally period limit is three, six, nine or twelve months.

Time Excess

Time excess is a number of days of interruption which has to be borne by the insured in the event of loss and generally it is 7 days.