Engineering InsuranceMachinery Loss Of Profit
Table of ContentsMachinery Loss of Profit Insurance (MLOP)
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Machinery Loss of Profit Insurance (MLOP)
An Industrialist suffers a loss due to unforeseen damage to the machinery. Many times, the time lag between the breakdown and the completion of repairs is too long and the consequential loss is substantial. The Machinery Loss of Profit policy covers consequential loss suffered by the insured as an inevitable consequence of the breakdown of any machinery due to an accident.
- Covers financial loss upon breakdown or failure of necessary machinery
- Offers exhaustive coverage along with the machinery break down policy for all risks associated with boilers, pressure plants and industrial machinery
- Extensions available to cover wages and auditor fees
The covers loss of gross profit due to:
- Reduction in the output: the sum produced by applying the rate of gross profit to the amount by which the output during the indemnity period shall in consequence of the damage fall short of the standard output.
- Increase in Cost of Working: the additional expenditure (subject to provision of memos) necessarily and reasonably incurred for the sole purpose of avoiding or diminishing the reduction in output but for that expenditure would have taken place during the indemnity period in consequence of the damage, but not exceeding the sum produced by applying the rate of gross profit to the amount of the reduction thereby avoided.
Less any sum saved during the indemnity period in respect of such of the Insured Standing Charges as may cease or be reduced in consequence of the damage.
Provided that if the sum insured by this item be less than the sum produced by applying the rate of gross profit to the annual output, the amount payable shall be proportionately reduced.
- Willful act or willful negligence or gross negligence of the insured or his responsible representatives
- Spoilage of raw materials, semi-finished materials or operating media (fuel, catalyst, lubricant etc.)
- Restrictions imposed by law enforcing authority
- Extensions of the normal repair period beyond 4 weeks due to
- Inability or delay of insured in securing replacement parts or delay in carrying out repairs.
- Customs restrictions
- Transport of damages or replacement parts to and from the insured premises. Alterations, improvements or over-hauling made while repairing.
- War and allied perils, Nuclear Perils
- Any defects are existing at the time of commencement of the policy , which as known to the insured.
In the event of loss, the following are immediate actions to be taken
Intimate the insurer the occurrence of loss, submit a full statement in writing of the claim, provide the nature and extent of loss and also the estimate of loss. Any delay in intimation might jeopardize the claim as the insurer may express an inability in accepting liability of the loss/damage.
- To take all steps to reduce and minimize the extent of loss/damage and liability.
- The proximate cause of the loss and assess the type/extent and whether it is within the scope of the policy.
- To extend full co-operation to the insurer and the surveyor appointed for completion of the survey work and for proper assessment of the loss.
- Produce all such records and proof as may be required by the surveyor or the insurer for arriving at the extent of loss and the liability under the policy.
- Provide documents such as claim form, Claim bill, copy of policy etc.
- Keep the damaged property under the safe custody until advised by the surveyor/insurer regarding its disposal.
- Identification of the subject-matter insured.
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