Basis of Loss of profit under FLOP
It is requirement of the policy that the standing charges should be disclosed in the Policy and the Insurer is not indicating in the policy as the Insured does not provide the same. The non disclosure of standing charges may settle the claim for lower amount. The standing charges may not be disclosed if the policy is issued on Differential Basis otherwise on Turnover/Output basis it should be disclosed. There are various bases to issue this policy like Turnover/Output/Differential/ Receipts/ Professional fees but it is observed that Insurers are always issuing the policy on “Turnover basis” irrespective of the nature of business. It is always advisable to issue the policy either on output basis or Differential basis for any manufacturing unit. Out of these two, differential basis is easier method to calculate the loss quantum. Under this basis no need to provide the details of standing charges while it is must for other options/basis.