Baraka Ltd. operates a housing development project. There was a fire on its premises on 31 January 2014 which destroyed most of the building, although stock to the value of Sh.6,960,000 was salvaged. The company has an insurance policy (with suitable average clauses) covering stock for Sh.600,000,000, buildings for Sh.800,000,000 and loss of profits (including standing charges for Sh.250,000,000 with a six month indemnity period).

An extract of the companys Statement of Financial Performance for the year ended 31 December 2013 is as shown below:

	Sh.000		Sh.000
Opening stock Purchases: materials Insured standing charges Other expenses Net profit for the year	412,500 1,812,500 167,500 80,000 57,500	Sales of houses Closing stock Interest on investment	2,000,000 525,000 5,000

Additional information:

1.	The companys records show that the sale of housing units for January 2014 had been the same as for the corresponding month in the previous year at Sh.100 million.
2.	Payments to payables were Sh.106,680,000 and Sh.3,320,000 was owing to payables at the end of January 2014.
3.	Business was disrupted until the end of April 2014 during which period turnover fell by Sh.180 million compared to the same period last year.
4.	It was agreed that of the value of buildings had been lost and that at the time of fire, buildings were worth Sh.1 billion

Required:

1. Ascertain the amount of various claims to be submitted to the insurers. (10 marks)
2. Explain the nature and purpose of special circumstance and average provision clause in an insurance contract covering consequential loss giving an example of your own choice (10 marks)