Claims & Loss of Profits Insurance

This guide explains the main features of loss of profits insurance policies, looking specifically at the practical applications when a claim under this type of policy is being considered.

Topics covered include:

• Introduction to final accounts
• policy definitions
• policy cover (gross profit, indemnity period, turnover, adjustments clause)
• policy cover
• savings in charges and expenses.

It also contains annexes that cover specimen policies, clauses and important cases.

Preface

The first edition of this book was a small volume resulting from a drastic editing of the original draft as the intention was that the book would be of manageable size and used for quick and easy reference in relation to basic ideas.

This principle has continued in this edition and thus the revisions are clarification of some matters and the insertion of a small amount of new material.

The short Chapter 8 Dual Basis Wages has been retained as it is still a form of cover available and used outside the UK. It is also of value in considering how wages cover has developed to its present form of “payroll cover” and it shows the underlying idea that leads to the payroll rating and premium process.

Appendix A now incorporates the recommended wordings and clauses of the Association of British Insurers and I am grateful for their permission to reproduce them.

Some people will have reservations about one or two of the interpretations expressed. This is inevitable as the contract document is not as precisely worded as it could be and opinions have to be formed in order to agree the amount to be paid in settlement of the claim.

Preface to the second edition

Preface to the first edition

Chapter 1. Introduction to final accounts; variable and fixed costs

Chapter 2. The insured; the business; the premises

Chapter 3. Gross profit; indemnity period; turnover; adjustments clause

Chapter 4. Rate of Gross Profit – specimen accounts and calculations

Chapter 5. Increase in cost of working; admissible additional expenditure

Chapter 6. Increase in cost of working (continued); savings in charges and expenses

Chapter 7. The sum insured - establishing the sum insured and checking adequacy

Chapter 8. Dual basis wages; cover and specimen loss calculation

Chapter 9. Salvage sales, accumulated stocks, etc

Conclusion

Appendix A Specimen policies and clauses

Appendix B List of cases

Appendix C Precis of cases

Appendix D Specimen accounts and chart

Index

R.M. Walmsley

The Chartered Institute of Loss Adjustors

The Chartered Institute of Loss Adjusters (CILA) is a globally recognised membership organisation for claims professionals. The Institute sets the professional and ethical standards for those who work in the handling of claims through its qualification framework and guide to professional conduct.

https://www.cila.co.uk/cila/about-cila