The construction
insurances such as EAR & CAR provide cover for physical, accidental
damages during the erection of a project. What happens if the project is
delayed due to such an accident and some part of revenues, that were
supposed to be generated on project completion, had to be foregone due to
the delay. 'Advance Loss of Profit Insurance' connotes a form of profit
insurance, which in principle, follows the characteristics of a normal
Consequential Loss Policy, but is issued in advance of the commencement of
business. It offers indemnity to the insured or owner of a project for
actual loss sustained, due to a delay in commissioning of the insured works.
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| The ALOP policy
requires close monitoring on the part of the insurers. In view of the same,
Insured is obliged to present the Insurers with updated progress reports at
intervals stated in the Policy Schedule.
The insured is also under obligation to inform the insurers about changes
in the project programme, testing procedures, alteration/modifications and
any changes in the insured's interest (such as discontinuation/liquidations
of business or its being placed in receivership).
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Apart from the general and special exclusions to the MD Section/Policy, the
following exclusions also apply to ALOP covers. |
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If any loss or
damage is covered under Material Damage policy by way of endorsement, the
delay arising therefrom will not form part of ALOP policy unless it has
been specifically agreed to in writing. |
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Similarly,
Catastrophic losses like earthquake, volcanic eruption, tsunami etc.,
damage to Contractors Plant and Machinery, Owners' Surrounding Property,
etc are not covered under ALOP unless specifically agreed to in writing. |
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Denial of
Access/Egress. |
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Restrictions
imposed by a Public Authority in respect of reconstruction or operation. |
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Shortage of
Funds |
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Loss of or
damage to operating media, feedstock, shortage, destruction, deterioration
of or damage to any materials necessary for the insured business. |
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Alterations,
additions, improvements, rectification of defects or faults or elimination
of any deficiencies carried out after the occurrence. |
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Loss or damage
or items taken over or taken into use by the insured or for which cover
has ceased under Material Damage Section |
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Loss or damage
to items taken over or taken into use by the insured or for which cover
under Section I to this Policy has ceased. |
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· Loss of
business due to causes such as suspension, lapse or cancellation of a
lessee, license or order etc., which occurs after the date of actual
commencement of the business. |
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