New Business Clause

NEW BUSINESS CLAUSE #

Where business interruption insurance is taken out for a brand-new business with no previous annual results upon which the usual formula definitions can operate, a special clause can be added which deals with the first twelve months of business activity. After that the normal specification wording operates. The usual wording is a follows:

Rate of Gross Profit :

The rate of gross profit earned on the turnover during the period between the date of the commencement of the business and the date of the incident

Annual Turnover :

The proportional equivalent, for a period of twelve months, of the turnover realized during the period between the commencement of the business and the date of the incident

Standard Turnover :

The proportional equivalent, for a period equal to the indemnity period, of the turnover realized during the period between the commencement of the business and the date of the incident

to which such adjustments shall be made as may be necessary to provide for variations in or other circumstances affecting the business either before or after the incident which would have been affecting the business had the incident not occurred, so that the figures thus adjusted shall represent as nearly as may be reasonably practicable the results which but for the incident would have been obtained during the relative period after the incident.