Advance loss of Profits Insurance (ALOP)

It is also called as "Loss of Profits following delay in Completion or "Delay in Start Up". Delay in start-up means a delay in the scheduled date of commencement of the business insured. It is designed to protect the interests of the Principal. The policy offers cover against loss of anticipated earnings/profits due to the delay in commissioning of the project following a loss covered under the project insurance policies. It is normally written in conjunction with Marine Cargo Insurance for critical items of the project and /or Erection All Risks Insurance / Construction All risk Insurance.

Scope of Cover
The policy pays for the actual loss of gross profit incurred during the period of delay, commencing from the scheduled date of commencement of commercial operation up to the actual date of commencement of commercial operation subject to a Time excess and Indemnity period selected. The delay however should have occurred due to a claim payable under marine -cum- erection policy, storage-cum -erection policy or contractor's all risk policy. It is designed to cover:

Loss of Gross Profit = Net Profit + Standing Charges.
Loss of Gross Earnings = Turnover - Specified Working Expenses
Fixed Operation & Management Costs
Debt Service Charges (Usually Interest Part)
Increased Cost of Working
Special Expenses e.g. penalties and soft costs
Examples of soft costs are: land rents, Advertising, promotional, marketing, Legal & Accounting, etc.

Key features

The policy is taken by the Principal as he stands to lose in case of any delay in the commissioning of a new project under installation / construction. The interests of the project financiers is also included as “additional insured”. It should be concurrent with Material Damage Project Insurance

Contractors / sub-contractors cannot be included as the joint insured as they have no Insurable Interest (unlike in an EAR / CAR Policy).

The delay can be due to damage during construction, erection or commissioning phase of project leading to risk of losing anticipated profit.

The Indemnity period should be selected by the insured based upon the longest replacement time required for critical items, time required for re‐ordering, re- manufacturing, transportation to the site, re-erection, testing and commissioning.

No extension of the period of insurance under the Storage Cum Erection Policy shall automatically extend the period of insurance for Delay in Start-up Insurance. Any anticipated change in the scheduled date of commencement of the business insured shall be reported to the Insurer and be effective for this section only if specifically agreed upon by the Insurer in writing.

Insured vs Uninsured Delays: while computing the financial impact of the delay, it is necessary to exclude the impact of delay arising out of uninsured events contributing for delay.
Any physical damage triggering a loss of profit which qualifies for DSU cover must occur within the DSU insurance period / extended period (if any).

Add on covers available

Premises of Customers

Public Utilities

Prevention of Access Damage at the Premises of Suppliers

Denial of Access

Sum Insured

Loss of gross profit sustained during the Indemnity period resulting from a reduction in turnover including any increased cost of working. Sum insured is the Indemnity selected for the maximum Indemnity period.

Premium depends upon:

Nature of project

Site location

Gross Profit

Indemnity Period opted

Compulsory Excess:

Policy is subject to a compulsory excess.