Scope of Cover

Reasons for carrying the business –Moral, Philosophical & Political.

Fundamental Objective – Profit Due to Unforeseen loss sales are lost, so difficult to operate the business because there will be a continuing need for cash to pay the fixed costs, such as rent, salaries, wages, heating, lighting, office expenses. Motor expenses, etc. LOP is related to revenue income and expenditure.

Gross Profit

The sum produced by adding to the net profit the amount of the insured standing charges or if there be no net profit the amount of the insured standing charges less the net trading loss.

The company chairman will bring in to accounts a sale of property or other assets. These are used to show a net profit in the accounts but nevertheless are not profits arising from the normal trading activity of the business.

Standing Charges

A standing charge is any charge or cost of the business that is not certain to reduce in the same proportion as a partial reduction in turnover or any charge or cost of the business, which the insured wishes to so designate.