Advance Loss Of Profit Insurance

Advance Loss

Advance Loss Of Profit Ins

Miscellaneous Insurance Policy

A Marine-cum-Erection or Contractor's All Risk policy covers only physical damage to property which, at best, covers the expenses incurred for repairing or replacing the damaged property.


The Advance Loss of Profit is designed to cover:

  • Loss of Gross Profit = Net Profit+Standing Charges
  • Loss of Gross Earnings = Turnover-Specified Working Expenses
  • Fixed Operation & Management Costs
    • Debt Service Charges
    • Increased Cost of Working
    • Special Expenses e.g. penalties

The policy pays for the actual loss of gross profit incurred during the period of delay, commencing from the scheduled date of commencement of commercial operation upto the actual date of commencement of commercial operation subject to a time excess and indemnity period selected. The delay, however should have occurred due to a claim payable under marine -cum- erection policy, storage-cum -erection policy or contractor's all risk policy.
The policy does not cover delay due to:

  • Inventory losses
  • Delay in shipment of supplies
  • Normal project schedule slippages
  • Non -availability of funds for repairs/replacement to damaged items
  • Cancellation of licence or Govt. restrictions etc

Who can take the policy?

The policy is taken by the Principal as he stands to lose in case of any delay in the commissioning of the project.

How to select the sum insured?

The sum insured should represent the Anticipated Gross Profit (i.e.Net Profit + Standing Charges) for the Indemnity Period selected.Net Profit means Business profit before taxation.
Standing Charges means fixed charges incurred even in the absence of business activity e.g. interest charges, salary & wages, Director's fees, O&M costs, activity e.g. interest charges, salary & wages, Director's fees, O&M costs, liquidated damages.
Indemnity Period should be selected keeping in mind the maximum period required for re-importing, re-erecting and/or re-testing any part of the project.

Note: Policy details given are indicative, not exhaustive. Please contact your nearest NIA office for further details.

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