Declaration-linked basis

Property insurance. Declaration based policies on stock that permit the insured to maintain a full insurance on fluctuating values without over-insuring. The insured selects the full amount at risk and pays a deposit premium based on 75 per cent of that figure. Following a series of stock declarations the premium paid is adjusted up or down up to 33 1/3 per cent of the deposit premium at the end of the year. 2. Business interruption. When insured on a ‘sum insured’ basis it works in the same way as property (see 1. above) but the adjustment is based on a comparison between the projected gross profit and the audited gross profit figure. Under a declaration-linked policy the insurer provides cover up to 133 1/3 per cent of the estimated gross profit. The deposit premium is based on 75 per cent of the estimate and the premium adjusted up or down at the end of the year subject to a minimum premium of 50 per cent of the deposit.