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INSURANCE OF LOSSES AS A RESULT OF COMMERCIAL (PRODUCTION) ACTIVITY DISRUPTION

 

Aim of insurance:

In case of damage, destruction or loss of property as a result of fire or other hazards, necessary for execution of commercial activity – total or partial disruption of activity (disruption of production) may occur. The expected income will not or will be partially received, and as a result of absence of income a necessity to engage additional resources to cover fixed charges will occur.

The aim of insurance of losses as a result of commercial activity disruption is security of financial consequences caused by material damages, by the means of financing the enterprise during its partial or total stand.

What is compensated:

Non-received income of the company (after taxation) and actual incurred dixed charges are subject to compensation. The fixed charges are deemed expenses, which do not depend on the volume of sales. Such expenses are:

  • taxes-and-duties, which do not depend on sales volume;
  • renting expenses, percentages of credits and lends.;
  • expenses for communal services and other fixed charges.

Important conditions of insurance agreement:

The extent of damages, incurred as a result of commercial activity disruption depends on the length of the disruption, i.e. the longer the disruption is the bigger the losses are. The liability of “INGO ARMENIA” ICJSC is limited by the duration of compensation period. Insurance coverage is provided only for losses, incurred as a result of commercial (production) disruption, which occurred during the period of compensation. As a rule the period of compensation is from 1 to 12 months. It starts since the moment of material/physical damage occurrence, which resulted disruption in commercial (production) activity.

Insurance of losses as result of disruption in commercial (production) activity is available only in addition to insurance of property against fire and other hazards.

Updated:   2010-03-27 11:03

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