Machinery Loss of Profits (MLOP)

MLOP insurance indemnifies the actual loss of gross profit sustained as a result of a business interruption caused by an accident covered under machinery insurance.

Scope of Cover

MLOP insurance compensates for:

  • The continuing business expenses (standing charges) including the salaries and wages paid to employees
  • The net profit
  • The increase in cost of working, i.e. the additional expenditure necessarily and reasonably incurred for avoiding or diminishing a reduction in turnover

The sum insured is, for normal cases, the gross profit obtained from the turnover of goods produced or handled in the course of the insured’s business for a period of twelve successive calendar months (i.e. normally for the business year). Increase in costs of working may also be covered under MLOP insurance, for instance the additional expenditure incurred for the use of external power if the insured’s own power supply breaks down (additional cost of consumption of kilowatt hours and maximum demand charges for kilowatts in excess of normal requirements).

The period during which the insurance will make good losses is defined as the indemnity period. This period – normally 3 to 12 months – is determined by the insured depending upon the replacement period for the machinery to be insured.

MLOP insurance is of special interest for all “bottleneck” equipment used in the field of power generation, such as boilers, steam turbines, generators, transformers, and for important process machinery such as paper machines, printing machines, presses, rolling mill equipment, refiners, crushers, compressors, pumps, etc., including their drives.