FIRE LOSS OF PROFIT

(FLOP)
 Pre-Requisite

• Can be taken only if a Standard Fire &

Special Perils Policy exists for the risk.
 What Can Be Insured ?
• Net profit (Profit before tax) due to the
stoppage of business as a result of an insured
peril
• Standing charges which continue to accrue in
spite of stoppage of business
• Additional expenditure incurred by the insured
to maintain normal business activity, during
the period in which the normal business is
affected.
• The loss of profit due to outbreak of fire is
covered
 Indemnity Period
• The indemnity period commences with the
date of damage and lasts till such a time as
the business is restored to its pre damaged
level or the period stipulated policy which
ever comes first.
• The policy insures earnings of the business
lost during the indemnity period.
 FLOP
If any building or other property or any part
thereof used by the insured at the premises for the
purpose of the business, be destroyed or damaged
by the perils covered under the Fire Policy,
(Destruction or damage so caused being
hereinafter termed damage), and the business
carried on by the insured at the premises be in
consequences thereof interrupted or interfered
with, then the company will pay to the insured in
respect of each item in the schedule hereto the
amount of loss resulting from such interruption or
interference in accordance with the Provisions
contained therein.
Sequence of events leading to LOP CLAIM

Fire
Fire//Flood
Flood

Damage
Damageto
toBuilding,
Building,P&M
P&M
etc.
etc.

Interruption
Interruption

Reduction
Reductionin
insales/
sales/
Production
Production

Loss
Lossof
ofGross
GrossProfit
Profit

Claim
Claim