Gross Profits Insurance
Categories: Insurance, Accounting
You run a ferry service between several islands off the coast of Greenland. Your business fundamentally consists of driving your boat back and forth between the various islands. Without your boat, you can't make a living. So you have it insured.
But you don't just insure the physical boat. You also take out gross profits insurance. If your boat gets damaged and you can't run your ferry service, the insurer won't just pay to repair the boat. It will also compensate you for the lost profit.
A rabid Narwhal pokes a hole in your boat. It will take a week to repair the hole. The insurance company pays to fix the hull. It also writes you a check for the $1,000 in gross profit you will miss while the boat is in the shop getting spackled.