| Depending on the type of insurance policy that you | | | | The loss of profit is equal to the shortage of sale |
| hold you may be eligible to make a claim for loss of | | | | multiplied by the gross profit ratio divided by 100. |
| profits apart from the damages incurred in the fire or | | | | Loss of profit= Shortage of Sale x G.P Ratio/100 |
| any other factor that your business is insured against. | | | | To determine the total amount of claim for loss of |
| However, in order to file such a claim you will have to | | | | profit you can add increase in the cost of working to |
| start by calculating the loss of profit from the date | | | | the loss of gross profit and deduct any saving in |
| of fire or flooding, which can be a confusing and | | | | standing charges from this figure. |
| daunting task. So here are the step by step | | | | In case of loss of profit calculation, insured standing |
| instructions on tacking this calculation: | | | | charges would entail all expenses mentioned in the |
| Step One: Gross Profit | | | | insurance policy of loss of profit. For instance, |
| If you want to calculate the loss of profit, you will | | | | expenses such as advertising, salaries of permanent |
| have to start by assessing the gross profit which can | | | | staff, auditor's fees, traveling expenses to the |
| then be multiplied by short of sale to get the loss of | | | | temporary premises, rent, taxes, interest on loans, |
| profit in the disturbance period. | | | | wages of skilled workers, other expenses which do |
| In order to calculate the gross profits, add the net | | | | not exceed 5% of the described standing |
| profit of the previous year to the insured standings | | | | expenditure can be added. |
| and the various charges of last year; the sum of | | | | If you feel that you cannot handle the calculation, |
| these should give you the gross profit. | | | | you can enlist the help of your auditor to help you |
| Step Two: Gross Profit ratio | | | | calculate the claim for loss of profit. It is imperative |
| Now, calculate the Gross Profit ratio by dividing the | | | | that you have all the relevant documents that prove |
| gross profit by sale of previous year and multiplying | | | | your claim. |
| the resultant figure by 100 | | | | Apart from this, you may also want to consider |
| So, GP Ratio= Gross Profit/ Sales of previous Year X | | | | getting in touch with an insurance assessor; the |
| 100 | | | | insurance companies will have their employees to |
| Step Three: Shortage in Sale | | | | assess the damage and to verify the veracity of |
| In order to calculate the shortage in sale, you will | | | | your claim. So in case of certain tricky situations, it is |
| have to determine the actual sale of the same period | | | | in your best interest to get an expert to work on |
| in the previous year. An increase in sales trends have | | | | your side as well. The insurance assessor will be able |
| to be added to this figure. Subtract the actual sales | | | | to point out anomalies in your claims, he will go |
| of the dislocation period from the sum of the two | | | | through the policy meticulously looking for extra |
| previous figures to get the shortage in sale. | | | | coverage that you can get. |
| Shortage in Sale = Actual Sale of the same period in | | | | An insurance assessor may also be able to help you |
| the previous year | | | | in case your claim has been denied and he may be |
| + Any increase in sales trends | | | | able to get into a renegotiation with the insurance |
| - The actual sales of the dislocation period. | | | | company. |
| Step Four: Loss Of Profit: | | | | |