Sum Insured/Limits of Indemnity

Insurers provide an overall standard limit of indemnity for any one accident.

 In respect of boilers and pressure plants, the limit will cover the boiler and pressure plant and installation costs with the option of two also include damage to the surrounding property.

This extension necessary because some policies exclude such property from damage by explosion of boilers not used for domestic purposes.

The limit should reflect the values in the immediate vicinity of the plant and also the nature of the plant.

Engineering Business Interruption insurance

Engineering business interruption are not in high demand as the fire business interruption policy. When they are issued, they generally follow the same principles as those of the fire business interruption policy.

This form of insurance indemnifies the actual loss of gross profit, sustained as a result of a business interruption caused by an event covered under the machinery breakdown insurance.

Most specifically, the policy compensates for loss of net profits, the continuing business expenses (standing or fixed costs), the increase in cost of working, i.e. the additional expenditure necessarily and reasonably incurred to avoid reduction in turnover.

The sum insured is the gross profit obtained from the turnover of goods produced or handled in the curse of the insured’s business for a period of 12 successive months i.e. gross profit of the last complete financial year.

This form of insurance is subject to time excess of normally two or 14 days. Losses corresponding to this period of time excess are not indemnified under this insurance. The time excess to be applied depends on the quantity of finished products stored, the possibilities up with the lost output and the financial burden which can be accepted by the insured.

Advance Loss of Profits (ALOP)

This refer to business interruption policy which covers financial consequences of a project being delayed because of accidental damage to the project materials.

A wide range of both internal or external causes can lead to delay in commissioning of a new project. Causes of such delays include political, social and economic reason which are generally not insurable. In the same way, delays due to management errors in judgement are likewise not insurable

The cover is normally given as an extension to material damage engineering insurance policy.

The objective of the policy is to indemnify the principal or the project owner for the actual loss sustained as a result in delay in commencing operations of new project which which is under installation or construction. The delay should be caused by a direct physical loss or damage covered under an engineering policy.