Top 9 Benefits of the Fire Loss of Profit Insurance Policy

A major accident at business premises can destroy the assets and halt your business. You may lose your gross profit and go through financial stress. It may take several months to get track of regular business operations again. The Fire Loss of Profit (FLOP) insurance policy, also termed Consequential Loss (Fire) Policy, can help you.

What Is the Fire Loss of Profit Policy?

• Together with Standard Fire and Special Perils Insurance, this policy covers the loss of profits and increased fixed expenditures due to diminished turnover. The cause of diminished turnover may be fire or other risks covered under Fire Standard and Special Perils Policy.
• The insurance company determines the situations/risks for which loss of profit policy coverage can be provided.
• The sum insured under this policy is the gross profit of the indemnity period – 6 months to 3 years.

Benefits of Fire Loss of Profit Insurance Policy

1. Cover to Consequential Losses To Profit

With a FLOP Insurance policy, you can protect your business from the loss of Gross Profit. A fire policy and special perils insurance do not cover consequential losses. They cover only physical damage to the assets of the insured business.

2. The Extensive Scope of Coverage 

The policy offers several covers, including accidental failure of electricity/gas/water supply, charges levied by auditors, and damage to premises due to risks.

3. Standing Charges 

You get coverage for standing charges. These are fixed expenses that continue to occur even after a loss/damage or reduction in turnover. It includes rent, property tax, telephone bills, vehicle insurance, etc.

4. Quick Coverage

The policy can cover deductibles for the days immediately after the loss. It may not be included while calculating the dropped profits.

5. Coverage to Damage to Supplier’s Premises

The policy also covers damages to the supplier’s premises, provided the damage should have occurred due to perils covered under Standard Fire Policy.

6. Protection from Loss of Wages

Wages continue to accrue despite halted business. The policy covers this loss also. Your work companions will also benefit from this policy.

7. Enough Time to Recover from Losses 

Unfortunately, if the damages/losses to your business are enormous, it may take a longer time to recover. If a fire loss of profit policy backs your business, you get coverage for six months to three years.

8. Maintain Relationships with Vendors 

In case of a fire outbreak, payment to vendors could be deterred due to a lousy hit to regular operation. A fire loss of profit policy helps you maintain your relationship as it covers consequential losses.

9. Minimize Losses 

The policy extends the material damage insurance covers that safeguard your business against fire as well as allied natural hazards. You are protected against the physical damages due to these hazards as well as consequential damages.

The Fire Loss of Profit Insurance Policy’s inclusions and exclusions depending on the loss of profit insurance calculation. Make sure you go through the insurance wordings while comparing this policy with different insurance companies.