Machinery Loss of Profits (MLOP) insurance indemnifies the actual loss of gross profit sustained as a result of a business interruption caused by Insured Perils covered under Machinery Break down Policy. MLOP Policy can be issued only if there is a Machinery Break down Insurance Policy. Perils covered, conditions, warranties shall be similar to Machinery breakdown Policy. The main perils covered are electrical/mechanical breakdown, impact damage etc. Claim under MLOP Policy admitted only when liability is admitted under Machinery Break down Policy. This insurance is of special interest for all “bottleneck” equipment used in the field of power generation, such as boilers, steam turbines, generators, transformers, and for important process machinery such as paper machines, printing machines, presses, rolling mill equipment, refiners, crushers, compressors, pumps, etc., including their drives.
Scope of Cover
This Policy Indemnifies actual loss of Gross Profits in respect of reduction in turnover/output lost on account of the shortage in turnover or output during the Indemnity period i.e. the net Profit , standing charges including the salaries and wages paid to employees & increase in cost of working ( ICOW)( i.e. the additional expenditure necessarily and reasonably incurred for avoiding or diminishing a reduction in turnover )due to Operation of Insured Perils covered under Machinery Breakdown policy.
All installed machinery and plant owned by or leased to the Insured for the purpose of the business can be covered excluding a) office machinery and data processing equipment b) Machinery and plant which is prototype or experimental c) machinery and plant located underground. d) Stock in trade and products of the business.
MLOP Policy can be issued only if there is a Machinery Break down Insurance Policy.
Claim under MLOP Policy admitted only when liability is admitted under Machinery Break down Policy.
Insured has an Option to Select the Machinery to be insured under MBD .
This Policy shall be avoided if the business is wound up or carried out by liquidator or receiver or permanently discontinued OR Insured’s Interest ceases otherwise than by death OR any alteration made whereby risk of an accident is increased.
Sum insured is the gross profit obtained from the turnover of goods produced or handled in the course of the insured’s business for a period of twelve successive calendar months & ICOW.
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.
Indemnity Period is determined by the Insured during which the Policy indemnifies the losses. This period is normally between 1 to 12 months depending upon time required to resume pre loss production for the machinery insured.
Add on cover available
Professional accountants fees necessarily and reasonably incurred for producing any particulars or any other proofs information or evidence as may be required under the claims.
Annual Gross Profit
Time required for repair/ or replacement of equipment
Spare parts availability and criticality of equipment
All the Exclusions of the Machinery Breakdown Insurance policy are applicable for this Policy which include fire and allied perils, theft and burglary, wear and tear, Spoilage of raw materials, semi-finished goods, Loss of good will of the customers, nuclear perils, radioactive/ionization perils etc
Compulsory Excess: This Policy has Compulsory Excess of 14 Days Standard Gross Profit.