covers lost profits and additional expenses due to delays or damages during the construction and erection phases of a project

The Erection/Construction, All Risk Advance Loss of Profit Insurance, is the only situation which assures you the protection under such scenarios. The policy covers principles interest due to increased cost of the working and loss of the gross profit, which was sustained due to a reduction in the turnover. The policy also takes care of the interference in the erection work and testing schedule, which created a delay in the commencement or any interference with the insured business.

The policy can be divided in two components:

1.  In respect of loss of gross profit: It is the sum obtained by applying the rate of the gross profit to the amount by which the actual turnover during the indemnity period falls short of the turnover which would have been achieved if the delay did not occur.

2.  In respect of the increased cost of working: It is the additional expenditure incurred for the only purpose of avoiding or diminishing the reduction in turnover which, without having such expenditure, would have commenced on time. But, this does not exceed the sum obtained by applying the rate of gross profit to amount of reduction in turnover and hence avoided.

Exclusions to the policy are following:

1.  Any loss or damage which is covered under section I of Erection All Risk Insurance/Construction All Risk Insurance (EAR/CAR) policy by way of endorsement

2.  The loss/damage to the surrounding property, any construction machinery plant and equipment

3.  The loss/damage to the operating media or feedback, destruction, shortage, deterioration/damage to any material necessary for the insured business

4.  Any sort of restrictions imposed by a public authority

5.  Non – availability of funds

6.  Alterations, improvements, additions, the rectification of the defects or faults or eliminations of any deficiencies carried out after the occurrence

7.  Any loss which is due to the fines or damages for breach of contract or the late/not completion of orders or any penalties

8.  The loss of business due to suspension, lapse, or cancellation of a lease license or order which occurred after the date of the actual commencement of the business

9.  Any consequences of war, invasions, hostilities nuclear reactions nuclear radiations or radioactive contamination or act of foreign enemy

10.  The Erection/Construction, All Risk Advance Loss of Profit Insurance, are generally purchased in conjunction with Marine cargo insurance for critical items of the project and Erection All Risk Insurance/Construction All Risk Insurance

11.  Also, any extension to the period of insurance will not be automatically providing an extension to the period of insurance mentioned in the schedule to the policy. Any extensions to the period of Insurance under the policy should be requested in writing stating the circumstances leading to the need of the extension.