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Personal Financial Planning

Notes the business is dependent, cost of auditor’s fee (required to submit the monetary
claim) can also be insured.
(iii) It covers reduction in gross profit due to a reduction in turnover followed by
interruption of business.
(iv) The additional expenditure necessarily incurred for avoiding or reducing the fall in
turnover during the interruption period is covered under this policy.
(v) Also, there are overhead expenses of running the business such as salaries, wages,
taxes, interest, etc. which continue to be incurred in spite of the interruption of the
production.
Premium: Premium chargeable depends on the type of industry/business, the anticipated gross
profit, indemnity period chosen and additional covers required. Refund of premium (not
exceeding 50%) can be claimed based on the actual gross profit figures as per the audited balance
sheet after the expiry of the policy.
Basic fire policy to cover the asset at the business premises is a prerequisite. For claiming
benefits under this policy, the loss should be first admitted under the fire policy. Amount of
gross profit required to be insured, the indemnity period, details of the business premises to be
covered and additional covers required shall be provided in the proposal form.

This policy is of immense benefit especially in case of major fire loss, when the business operations
get interrupted resulting in reduced turnover and eventually in loss of profits. It is a well-
known fact that fixed or standing charges have to be incurred immaterial of the fact, whether
there has been any production or not. All these are not covered by the normal fire policy. It is in
this context that the consequential loss policy comes into force. Thus, for overall protection to
the business and its profitability, consequential policy is necessary in addition to the fire policy.

Task Prepare a project report on different private sector Insurance companies operating
in India.

8.7.4 Motor Insurance

Vehicle insurance is the insurance which consumers can purchase for cars, trucks, and other
vehicles. Its primary use is to provide protection against losses incurred as a result of traffic
accidents.
Generally speaking it is a cover in respect of motorized vehicles including fire, theft, impact,
collision and third party liability cover.

Insurance can cover some or all of the following items:
1. The insured party
2. The insured vehicle
3. Third parties

What is a motor vehicle?

Motor vehicle includes private cars, motorized two wheelers and commercial vehicles excluding
vehicles running on rails.

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