Your quick guide to Delay in Start-Up Insurance

31 March 2021

Critical components required for various industrial infrastructure projects often consist of heavy lift cargo such as machinery or equipment which must be delivered on-site. Despite intricate planning to deliver the goods safely and within project timelines, an unexpected or unavoidable event can severely interrupt these plans. Should these events cause physical loss or damage to the cargo or conveyance, significant consequential financial losses could ensue.

In the event of such a loss, cargo insurance alone will be an insufficient remedy for the financial consequences of a project delay while the critical items are being replaced or repaired. Delay in Start-Up (DSU) is a type of marine insurance that can be packaged with cargo insurance to mitigate this risk.

DSU insurance provides coverage for the actual loss sustained at the project site of the insured. Such “actual” loss sustained may include the loss of gross profit, any increased cost of working incurred for the purposes of avoiding or mitigating a reduction in turnover, and any fixed costs and debt servicing which are not affected by any change in production. A claim under this coverage is triggered by a physical loss or damage event involving the cargo or the carrier conveyance that causes a delay to the scheduled commercial operation date.

When seeking DSU coverage, assureds will need to provide much of the same information that is standard when seeking marine cargo coverage. In addition, they will be required to disclose items including:

  • A full schedule of the items to be shipped including values, shipping dates, origins, and method of transport;
  • The scheduled commercial operations start-up date;
  • Details of all critical items and their anticipated shipping dates;
  • Details of the maximum replacement period in the event of a total loss of any one critical item calculated from the date of re-order to the date of delivery;
  • The maximum installation, testing and commissioning period for the critical items; and
  • The period of indemnity required from the date of the expected start-up.

Pricing for DSU varies greatly due to the unique nature and scope of each project. However, proper risk management practices can assist the insured in securing best coverages. At Unison, we have a dedicated team with a wealth of experience in facilitating DSU insurance policies. Our team will analyse your project and provide a policy tailored to your needs at the market-best rate.