The physical loss or damage or destruction in a construction or erection project is paid either in the Contractors’ All Risk Policy or the Erection All Risk Policy. But what about the financial loss incurred due to the delay in project due to the accident.
Advance Loss of Profit Policy comes to the aid and it covers the loss of gross profit and or fixed operating and management cost incurred during the delay in the project period. The delay here is the difference between the scheduled date of commencement of the production and actual date of commencement of production.
The policy has to be taken by the Principal as it is he whose financial interest is lost due to delay in project.
The policy does not pay for delay in shipment of supplies, normal project schedule slippages, non availability of funds for repairs/replacement of damaged items, delay in obtaining government/regulatory clearances.
The sum insured which is the gross profit should be selected cautiously such that it covers all the standing charges, operating expenses, management costs and any increased cost of working.
Disclaimer: The above is a broad indication. The actual available are as described in the policy wordings of the insurance company and will be subject to the policy terms, conditions and exclusions.