MLOP claim under IAR Policy

[Bharat Bhushan]

Dear friends

I have a query in respect to MLOP claim under IAR policy and want to have expert opinion of my learned friends and members

An insured has suffered a loss of profit under Business Interruption of IAR policy. The Material damage loss was reported under breakdown section and interruption period was 30 days. The time excess under MLOP is 14 days of gross profit.

The average gross profit per day in the standard turnover is Rs.200,000.00 per day.

The loss of gross profit for interruption period of 30 days is Rs.3,000,000.00 (because reduction in gross profit per day is Rs.100,000.00 due to breakdown)

Method - I

Loss of gross profit for interruption period (30 days)  Rs.3,000,000.00

Time excess 14 days                                                  Rs.1,400,000.00

                                                                                    ----------------------

Net liability                                                                  Rs.1,600,000.00

                                                                                   -----------------------

Method - II

 

Loss of gross profit for interruption period (30 days)  Rs.3,000,000.00

Time excess 14 days                                                  Rs.2,800,000.00 *

                                                                                    ----------------------

Net liability                                                                   Rs.   200,000.00

                                                                                    -----------------------

* Insurer has interpretation that time excess is 14 days of gross profit.

But my submission is, it is the time excess not the normal excess. The insurer is not liable for the period stated in Time Excess. The corresponding amount shall be calculated by multiplying the average daily value of loss sustained during the interruption period by the number of days agreed upon as the time excess.

 

I want to have view and opinion of my learned fellow members on this issue supported with documentary evidence. 

Thanks & Regards

Bharat Bhushan

9416013786

 

[Shailesh Shah]

Your view is correct. The excess is time specific and not g.p. specific.
Is the factory working 30 days a week?
Also refer last years t/o for same period of breakdown.

I trust loss is admitted in mb section.

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