ALOP 1

ALOP ( ADVANCE LOSS OF PROFIT ) D.KAUSHAL

OR DSU ( DELAY IN START-UP ) INSURANCE

SOME BASIC INFORMATION :-

COVERS WHAT : -

if loss to project due to insured peril under project ( EAR / CAR policy ) –

it may lead to delay in commissioning of project -

which then, leads to delay in start of operations of project –

which may result in actual turnover falling short of targeted turnover

& this may cause financial loss to principals / owner.

Such type of financial loss is covered by ALOP or( DSU ) policy.

Policy indemnifies : a) loss of gross profit ( Net profit & standing charges) profit )
- due to actual turnover falling short of targeted turnover
- which would have been achieved had delay in
- commissioning of project not occurred .

& b) ICOW ( Increased cost of working )

NOTE : Standing charges includes fixed costs & Debt Service charges
i.e. Debt Service charges are also payable.

- it is a consequential loss insurance or loss of profit policy

- it is issued only to – Principals or Owner of project

- it is issued - in advance of actual commencement of business

- & for delay in commencement of project / business.

- .
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SUM INSURED :-

In ALOP , S.I. is based on assumptions & / or extrapolations. ( since project operation is

to start on some future date)
Hence its definition is on ‘would have been’ basis.

POLICY PERIOD :-

it is same as in project policy (i.e. EAR / CAR policy period )

terminating on the day when cover under ear/car policy ceases.

PERIOD OF LIABILITY : -

Liability commences from the scheduled date of commencement of commercial

operation selected by the insured .

The loss for ‘delay beyond maximum indemnity period’ is to be borne by the insured.
betond

MATERIAL DAMAGE PROVISO :-

Like other LOP policies, precondition for claim admissibility under ALOP is that first
claim should be admissible under project policies like EAR , MCE or CAR.

There is a Time excess applicable

It is 100 % reinsurance dependent policy

NOTE : -In case one finds any corrections or some other imp. additional points to
be made in the above write up , pl. let me know about the same.

(DINESH KAUSHAL ) –
MOBILE :9911127499
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