Summary |
Under both Machinery Breakdown and Fire insurance indemnity is provided, in respect of damaged or damaged or destroyed machinery, solely for the material loss sustained by the Insured. These types of insurance do thus not protect the Insured against all the losses types of insurance do thus not protect the Insured against all the losses which may arise in connection with a fire or the break down of machinery, since in most cases a material loss also cause an interruption or interference of the Insured’s business operations. The result is a financial loss, e.g. in the form of lost profit and unearned standing charges, such as interest payments, depreciation, wages and salaries, etc. In many cases the loss sustained as a result of an interruption or interference of the Insured’s business operations. The result is a financial loss. e. g. in the form of lost profit and unearned standing charges, such as interest payments, depreciation, wages and salaries, etc. In many cases the loss sustained as a result of an interruption or interference of business operations by far exceeds the mere material loss. An awareness of the need for insurance protection against the financial consequences of material damage arose at the beginning of this century, and the result was the introduction of the two variants, Loss of profits following Machinery Breakdown insurance – also called Machinery Loss of Profits (MLoP) insurance – and Loss of Profits following Fire insurance. As the size of modern production facilities is increasing steadily, MLoP insurance is gaining more and more importance. In the following, the basic features of MLoP insurance will be dealt with. Detailed information on this class of business is provided in the training courses organized by the Munich Reinsurance Company.
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