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ALOP Insurance Overview and Claims

This document discusses insurance for Actual Loss of Profits (ALoP) on construction projects. ALoP insurance indemnifies the principal or owner of a project for losses from delays in completing insured works caused by physical damage covered under a material damage policy. Only the principal can be insured; lenders cannot be insured or co-insured. The sum insured is based on anticipated gross profit from the scheduled commencement date. Claims can be made for lost net profit, standing charges, and increased costs to reduce delay. The indemnity period starts when commercial operation was planned to start and ends when works are completed. Multiple delays may occur within the maximum indemnity period.

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40 views17 pages

ALOP Insurance Overview and Claims

This document discusses insurance for Actual Loss of Profits (ALoP) on construction projects. ALoP insurance indemnifies the principal or owner of a project for losses from delays in completing insured works caused by physical damage covered under a material damage policy. Only the principal can be insured; lenders cannot be insured or co-insured. The sum insured is based on anticipated gross profit from the scheduled commencement date. Claims can be made for lost net profit, standing charges, and increased costs to reduce delay. The indemnity period starts when commercial operation was planned to start and ends when works are completed. Multiple delays may occur within the maximum indemnity period.

Uploaded by

rajasekharbo
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd

Bajaj Allianz General Insurance Co. Ltd.

INTERESTS INVOLVED IN A PROJECT


FINANCE CHARGES

MAIN CONTRACTOR

PRINCIPAL
LOANS
GROSS PROFIT

FINANCIAL INSTITUTIONS

INVESTMENT MANAGEMENT

SUB
CONTRACTORS
MATERIAL LABOUR 2

PROJECT

OBJECT OF ALOP INSURANCE

TO INDEMNIFY THE PRINCIPAL OR OWNER OF A PROJECT FOR THE ACTUAL LOSS SUSTAINED DUE TO A DELAY IN COMPLETION OF THE INSURED WORKS

THIS DELAY MUST BE CAUSED BY DIRECT PHYSICAL LOSS OR DAMAGE COVERED UNDER THE MATERIAL DAMAGE SECTION OF SCE POLICY
NOT EXCLUDED BY ALOP ENDORSEMENT

WHO CAN BE INSURED ?

ONLY THE PRINCIPAL.

LENDERS SHOULD NEVER BE AN INSURED OR CO-INSURED.

IT IS POSSIBLE TO GRANT A LOSS PAYEE CLAUSE. CONTRACTORS, SUBCONTRACTORS CANNOT BE ACCEPTED AS INSUREDS UNDER ANY ALOP EXTENSION. 5

SUM INSURED
S.I. HAS TO BE ARRIVED CONSIDERING REVENUE GENERATION PROJECTION FROM SCHEDULED COMMENCEMENT DATE OF 1st UNIT. S.I. IS ANTICIPATED GROSS PROFIT THE DECISION TO INSURE OR NOT TO INSURE THE FULL GROSS PROFIT IS WITH THE INSURED INSURED CAN OPT TO INSURE : STANDING CHARGES ONLY INTERESTS ONLY EXPRESSED AS PERCENTAGE OF G.P.
6

PROJECT PERIODS
INSURANCE PERIOD CAR / EAR - ALOP
MAXIMUM INDEMNITY PERIOD

( ALOP )

TRANSIT PLANNING

ON SITE STORAGE
HANDLING CONSTRUCTION ERECTION

COLD / PRE TEST

HOT TEST

COMMERCIAL OPERATION

SCHEDULED DATE OF COMMENCEMENT OF INSURED BUSINESS

WHAT IS CLAIMABLE ?
LOSS OF NET PROFIT

STANDING CHARGES PAYABLE DESPITE THE LACK OF INCOME INCREASE IN EXPENDITURE TO REDUCE OR AVOID THE DELAY TO START-UP

What we mean by LOSS OF GROSS PROFIT

STANDING CHARGES
AND

NET PROFIT

INCREASE IN COST OF WORKING

THE EXPENDITURE NECESSARILY AND REASONABLY INCURRED TO DIMINISH

OR AVOID A REDUCTION IN TURNOVER


DURING THE INDEMNITY PERIOD.

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INDEMNITY PERIOD
THE PERIOD OF INDEMNITY COMMENCES WITH THE DATE UPON WHICH, HAD THE INSURED PHYSICAL LOSS OR DAMAGE NOT OCCURED, THE INSURED WOULD HAVE COMMENCED COMMERCIAL OPERATION,

BUT NOT PRIOR TO THE PLANNED DATE


INDICATED IN THE SCHEDULE.

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THE PERIOD OF INDEMNITY ENDS

WITH THE ACTUAL DATE UPON WHICH THE INSURED WORKS ARE COMPLETED OR THE FULL OPERATIONAL TESTING OF THE INSURED WORKS IS COMPLETED.
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MAXIMUM INDEMNITY PERIOD


ORIGINAL CONTRACT PERIOD ORIGINAL MD, ALOP-POLICY PERIOD

DELAY

SUPPLY

ERECTION AND TESTING

RoD, RESUPPLY

ERECTION & TESTING

MARGIN

ACCIDENT

SCHEDULED BUSINESS COMMENCEMENT

MAXIMUM INDEMNITY PERIOD


13

ONLY ONE CLAIM PER POLICY


Indemnifiable Accident Build up of the sum insured

Indemnifiable Accident

Non-Indemnifiable Accident

Indemnifiable Accident

14 excess Indemnifiable Delay to be adjusted for time for reinstatement with same design

INSURED AND UNINSURED DELAYS


FIRE, NEGLIGENCE

STRIKE, SHORTAGE OF MATERIALS

SCHEDULED BUSINESS COMMENCEMENT


UNINSURED DELAY

INSURED DELAY

INDEMNITY PERIOD 15

ALoP Insurance In a Nutshell



The Insured in ALoP is the PRINCIPAL ONLY Concurrent material damage (MD) insurance Same Insurer(s) for ALoP and MD Extremely good co-operation between all parties Insurance period identical to MD erection period Accident not immediately followed by indemnity period Only one claim per policy Only one time excess per policy Max. indemnity period sufficiently long

16

Thank You

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