Loss Of Revenue Vs Loss Of Profit Insurance

This information is found on a company s income statement.

Loss of revenue vs loss of profit insurance. Since profit is the last line on the income statement a one dollar loss in profit impacts shareholders returns by one dollar. To calculate profit you have to take the revenue of a company and subtract all of the expenses including interesting expense and taxes. Terms used in loss of profit insurance. The following are the important terms used in loss of profit insurance and a knowledge of the terms will be advantageous.

A normal fire policy only indemnifies loss of stock or assets and fails to insure any loss of profit suffered by the concerned business. Following are the important terms used in loss of profit. If you are out rental income because of an insured loss this coverage provides you with the lost rent money until the repair or replacement is complete. Indemnity period means the period which commences on the date of damage by fire and ends on the date when normality is restored.

Therefore a consequential loss policy should be taken to cover the loss of profit loss of fixed expenditure etc. Form of profit and loss account. The interest dividends and rents less income tax thereon shown in the revenue accounts for any classes of business other than life insurance business including annuity business may if the insurer so desires be included within the corresponding items in the profit and loss account. It s similar to a profits form policy but it pays up to the actual loss sustained.

Actual loss of income coverage is an excellent extremely broad form of loss of insurance. Business income usually an insurer is responsible for the reduction in net income that results from suspension of operations whether wholly or partially due to a. This loss however is subject to the policy limit or sublimit that is applicable to the specific location where the loss occurs or the type of peril that leads to the loss.