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Scope of Cover
All perils under the Machinery Breakdown policy can be covered under Machinery Loss of Profits Insurance Policy (MLOP). Hence,the main perils covered are electrical/mechanical breakdown, voltage surge, impact damage etc.
The amount payable as indemnity is in respect of reduction in turnover/output is the gross profits lost on account of the shortage in turnover or output during the indemnity period in consequence of the material damage under Machinery Breakdown policy.
Code: Marine 02
The sum insured is to be declared as annual gross profits estimated during the policy period.
This can be arrived at by either considering gross profits on difference basis which is (Revenue - Variable Expenses) or additions basis which is Net Profit + Standing Charges.
The underlying Material Damage policy for this MLOP cover would be Machinery Breakdown policy. Hence all the exclusions of the Machinery Breakdown policy would be applicable for MLOP cover.
The major exclusions will be fire and allied perils, theft and burglary, nuclear perils, radioactive/ionisation perils, and wear and tear.
The policy will have an excess in terms of days for each and every loss.