2. contents 3. 4. Q1. A ladies' fashion retail company, consisting of a large chain of shops, situated mainly in shopping malls, suffers a fire in its main supply warehouse. A large amount of stock - clothing and fashion accessories-is destroyed. Some stock is smoke damaged, but some is saved. There is damage to the building and some plant- the modern automated racking systems. At the time of the fire the insurance cover was as follows: Item Description Sum insured (GHC) Basis of cover 1. Building including fixtures & fittings 2,150,000 Reinstatement Machinery and all other 1.250.000 Reinstatement Stock 2,000,000 Indemnity Business interruption, gross profit (annual) 9,000,000 Declaration linked Maximum indemnity period is Twelve months Turnover in the nearest financial year was 15,000,000. The amount claimed is as follows: Material Damage: Buildings-repair 750,000 Machinery repair and replacement: 650,000 Office contents: 45,000 Stock: 950,000 Architects and surveyors fees: 35,000 Business Interruption: Reduction in turnover - this is for a period of three months 3,750,000 Savings: 150,000 Increased cost of working (economic): 50,000 The insured discovers that he has accidentally underinsured Item 2. This should have a replacement cost of GHCI, 400,000 Liability has been established under the policy. a.) Calculate the total Material Damage (MD) claim [10 marks! b.) Calculate the total Business Interruption (BI) loss [10 marks GHC