Advanced Loss of Profit Insurance

 

Advanced Loss of Profit Insurance

Advanced Loss of Profit Insurance (ALOP), provides a payout to companies that face higher costs or lost profits when a project takes longer than expected to complete. Also called delayed completion coverage or Delay in Start-up Insurance(DSU).

A Marine-cum-Erection or Contractor’s All Risk policy covers only physical damage to property which, at best, covers the expenses incurred for repairing or replacing the damaged property.

Scope

The Advance Loss of Profit is designed to cover:

Loss of Gross Profit = Net Profit+Standing Charges

OR

Loss of Gross Earnings = Turnover-Specified Working Expenses

OR

Fixed Operation & Management Costs

Debt Service Charges

Increased Cost of Working

Special Expenses e.g. penalties

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 upto 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.

The policy does not cover delay due to:

Inventory losses

Delay in shipment of supplies

Normal project schedule slippages

Non -availability of funds for repairs/replacement to damaged items

Cancellation of licence or Govt. restrictions etc

Who can take the policy?

The policy is taken by the Principal as he stands to lose in case of any delay in the commissioning of the project.

How to select the sum insured?

The sum insured should represent the Anticipated Gross Profit (i.e.Net Profit + Standing Charges) for the Indemnity Period selected.Net Profit means Business profit before taxation.

Standing Charges means fixed charges incurred even in the absence of business activity e.g. interest charges, salary & wages, Director’s fees, O&M costs, activity e.g. interest charges, salary & wages, Director’s fees, O&M costs, liquidated damages.

Indemnity Period should be selected keeping in mind the maximum period required for re-importing, re-erecting and/or re-testing any part of the project.

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Advanced Loss of Profit Insurance asuransi yang menyediakan cakupan untuk kerugian finansial karena keterlambatan proyek-proyek konstruksi dan infrastruktur.

Kehilangan muka asuransi keuntungan ( ALOP ) , menyediakan pembayaran kepada perusahaan yang menghadapi biaya yang lebih tinggi atau kehilangan keuntungan ketika sebuah proyek membutuhkan waktu lebih lama dari yang diharapkan untuk menyelesaikan .

Juga disebut cakupan selesai tertunda atau Keterlambatan Start- up Asuransi ( DSU ) .