A single insured event can push project commissioning by months. Delay in Start-Up Insurance ensures that financial losses — lost revenue, loan costs and overheads — are covered when your physical damage policy kicks in.DSU is a financial consequence policy triggered by physical damage under the underlying construction policy. It covers lost revenue, financing costs, take-or-pay contract penalties and standing charges during the delay. Indemnity periods range from 6 to 24 months. Lenders and DFIs often require DSU as a condition for financial close.DSU covers the project owner's delay losses; Contractor's Delay Insurance covers contractor penalties. DSU should be purchased at project outset. Cost overruns from delay are not covered. DSU is widely used for solar, wind and hydropower projects.
Once an insured physical damage event occurs and delay is confirmed, DSU coverage begins paying for lost revenue from the first day of the indemnity period (after any deductible period). This ensures that the cash flow shortfall from delayed operations is partially offset by insurance proceeds, protecting the project's financial covenant compliance.
During a construction delay, loan interest, commitment fees and other finance charges continue to accrue. DSU Insurance can be structured to cover these financing costs, which is a significant protection for highly leveraged projects where debt service is a major component of the project's fixed cost base.
Many projects have pre-existing take-or-pay contracts with offtakers or raw material supply agreements with penalty clauses. If a construction delay prevents the project from meeting these obligations, DSU Insurance can cover the resulting financial penalties or payment obligations under these contracts.
Lenders, DFIs and infrastructure equity funds increasingly require DSU Insurance as part of the conditions for financial close. A well-structured DSU policy signals that the project's financial model is protected against foreseeable delay risks, making it easier to achieve and maintain lender confidence.
DSU policies are structured around the project's critical path and estimated commissioning date. Coverage can be tailored to align with specific project milestones, concurrent delays and multiple contract packages, ensuring that the policy accurately reflects the project's complexity and risk profile
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DSU Insurance covers the project owner's financial loss due to delays caused by insured physical damage. Contractor's Delay Insurance, sometimes called Contract Penalty Insurance, covers a contractor's liability for delay penalties owed to the project owner. The two products protect different parties in the project ecosystem.
Indemnity periods typically range from 6 months to 24 months, depending on the project's complexity, the potential maximum delay scenario and lender requirements. Longer indemnity periods attract higher premiums but provide greater financial protection.
DSU Insurance covers financial losses — primarily revenue loss and standing charges — resulting from delay. Construction cost overruns caused by the delay are typically not covered under DSU. These may be addressed through other risk management tools such as contingency budgets or contract provisions.
DSU should ideally be purchased at the outset of a project as part of the overall project insurance programme. Purchasing it mid-project is technically possible but may face restrictions based on the current status of construction, potential existing delays and insurer appetite.
Yes. DSU Insurance is widely used for solar, wind and hydropower projects where delayed commissioning has significant financial implications — including lost power purchase agreement revenues, loan interest accrual and project viability concerns. It is increasingly required by renewable energy project lenders in India.
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