The 60-second version
Loss of profit insurance reimburses gross profit and standing charges when insured property damage stops business operations — pairs with standard fire and machinery policies.
LOP covers profit lost during shutdown — fire policy covers physical damage only
Loss of profit (LOP) policy pays gross profit and standing charges during indemnity period when fire or machinery breakdown stops operations.
Returning NRIs opening factory, hotel, or retail after return should bundle LOP with standard fire policy — banks often mandate for collateralised loans.
Fire lane: fire insurance guide for stock and building cover.
Business interruption stack
| Policy | Covers | Trigger |
|---|---|---|
| Fire | Building + stock | Physical damage |
| LOP | Gross profit | Business shutdown |
| MBD | Machinery repair | Equipment breakdown |
| CAR | Construction site | Project delay |
LOP purchase sequence
Gross profit
Last 12-month basis.
Indemnity period
12–36 months.
Bundle fire
Same insurer.
Policy issue
Named premises.
Books ready
P&L for claims.
Cover stack
LOP kit
- Audited P&L.
- Fire policy no.
- Indemnity months.
- Standing charges list.
- Claim helpline.
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Indemnity period
Under-insuring indemnity months caps payout — 12 months may be insufficient for factory rebuild.
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vs fire only?
Fire pays repair cost; LOP pays profit lost during closure.
vs MBD?
MBD covers machine repair; LOP covers profit during any insured peril shutdown.
GST on premium?
18% GST on insurance premium.
Bank mandate?
Lenders often require LOP on factory collateral.
Claim docs?
Audited P&L, fire survey report, and indemnity period timeline.
Hotel use?
LOP common for hospitality — gross profit basis from occupancy accounts.
The plan is only as good as the sequence.
Tax, banking, schools, shipping — they all have dependencies. A wrong order costs months and lakhs. Get it right.