Fire and Consequential Loss Insurance - IC 57 Exam Study Notes

Turnover is used as the index of business activity? and therefore, as the measure of loss, in the great majority of consequential loss insurances. The wording of the ?Output? basis of specification is the same as that used for ?Turnover? specification, except that ?Turnover? is substituted by ?output?.
The output basis of specification is adopted where loss measurement under turnover basis does not provide a fair indemnity to the insured, as when accumulated stocks are used by the insured to maintain turnover in which case there will be no reduction in turnover although there is reduction in output.
Under the Difference basis of specification Gross Profit is the amount by which the sum of the Turnover and the amount of the Closing Stock exceeds the sum of the amount of the Opening Stock and the amount of the Specified Working Expenses.
For claim settlement usually material damage and loss of profits policies will be with the same insurer who can appoint the same surveyor for both loss assessments. However, depending upon circumstances different surveyors may also be appointed.
The rate of premium for C.L. policy consists of two components: Basis rate and percentage for indemnity period.

Important Points for IC 57 - Fire and Consequential Loss Insurance Exam