Insurance explained

What is delay in start-up insurance?

Reviewed by the Apex broking team · Last reviewed 2026-10-31

Delay in start-up insurance is cover for the income a construction project owner loses when insured physical damage during the works delays completion. It matters because contractors' all risks pays for repairs, not the lost profit, rent or interest while opening is delayed.

Part of: Commercial insurance

In short

Delay in start-up (DSU) insurance, also called advance loss of profits, pays a project owner's lost gross profit, revenue, rent or extra finance costs when insured damage during construction pushes completion past the scheduled date. It is linked to the CAR or contract works policy, so the delay must be caused by physical damage insured there. Cover runs for a maximum indemnity period after a time excess of a stated number of days. It is usually bought by employers, developers and owners, often at a funder's request, and is not a substitute for, nor the same as, the contractor's liquidated damages.

What delay in start-up insurance is and how it works

When a construction project is damaged before completion, contractors' all risks (CAR) cover usually pays to repair the physical damage. It does not pay for the income the finished project would have earned while the repair pushes back the opening date. Delay in start-up (DSU) insurance, also called advance loss of profits (ALOP), fills that gap.

A paper published by the Chartered Institute of Loss Adjusters describes these covers as insuring loss of income resulting from an insured delay in commercial start-up of the project, and notes they are generally linked to CAR cover by a material damage proviso. In practice that means:

The trigger is physical loss or damage of a kind insured under the CAR or contract works policy, during construction, erection, testing or, where included, transit of key items.
The delay must push the actual completion or start of operations beyond the scheduled date in the agreed programme.
The loss is the income the project would have earned during the delay, measured against what was projected, plus some extra costs to reduce the delay.

Delays without insured damage, such as planning problems, late design or labour shortages, are not covered. That is the single most important feature of the product.

What it usually covers and what it usually does not

Usually covered, subject to terms	Usually not covered
Loss of anticipated gross profit or revenue from the delayed project	Delay without insured physical damage, such as late design, planning or supply problems
Loss of anticipated rent from a delayed building	Damage excluded under the CAR policy, such as the cost of correcting defects
Additional interest on project finance during the delay	Delay within the time excess at the start of the claim
Fixed costs that continue while income is delayed	Loss beyond the maximum indemnity period
Reasonable extra costs to recover lost time, such as overtime or expediting	Contractual penalties and liquidated damages the insured owes to others
Delay caused by insured damage to key items in transit, where included	Interruption after handover, which belongs to operational business interruption

The CILA paper lists four related forms: loss of advance profits, loss of advance revenue, loss of advance rental and loss of additional interest. A project may need more than one. If you are unsure whether profit or revenue is the right measure, our page on gross profit vs gross revenue explains the difference in ordinary business interruption, and the same thinking applies.

Indemnity period and time excess

Two numbers shape every DSU policy.

Maximum indemnity period. The longest period of delayed income the policy will pay for. It should reflect how long it could take to redesign, reorder and rebuild after a serious loss, including long-lead items. Our explainer on the indemnity period in business interruption covers the general principle.
Time excess. Instead of a monetary excess, DSU commonly uses a number of days of delay that the insured bears itself before the policy pays.

The CILA paper warns that careless definitions of the indemnity period cause problems, giving the example of one commencing at the date of the damage. DSU is about delay to the scheduled completion, so the wording should be clear on when the indemnity period starts and how the scheduled date is fixed.

Illustrative example: a hotel is due to open on 1 June. A fire during fit-out damages the plant room, and repairs and replacement plant push opening to 1 October. With a time excess of a stated number of days, the policy would pay the hotel's lost gross profit for the rest of the four month delay, within the maximum indemnity period and subject to the terms.

Who buys it

DSU is usually bought by whoever will earn the income from the finished asset, often with lenders noted as interested parties.

Employers and project owners building a factory, hotel, data centre or energy plant that will generate revenue.
Developers and landlords with pre-let tenants, where delay means lost rent. See property developer insurance and loss of rent insurance.
Funders, who may require DSU or additional interest cover as a condition of lending, because debt service continues while income is delayed.

Illustrative example: a developer is building student accommodation that must open for the start of the academic year. Storm damage to the partly finished roof delays completion past September. DSU written as loss of advance rental could respond to the lost rent, subject to the policy terms and any time excess.

Contractors rarely buy DSU for themselves, because it protects the owner's income, not the contractor's margin. They are, however, closely involved in a claim, because the programme and critical path drive the measure of delay.

DSU vs the contractor's liquidated damages

Owners sometimes assume that liquidated damages (LDs) in the building contract will cover lost income if the project runs late. There are two problems with relying on them for insured events.

Building contracts commonly allow the contractor more time where delay is caused by insured damage, so LDs may not be payable at all for the very events DSU covers.
Where LDs are payable, they are a pre-agreed rate. The CILA paper notes that contractual delay damages often bear no relation to the real financial impact of a delay.

DSU also differs from operational business interruption insurance. Business interruption protects an existing, trading business; DSU protects income that has not started yet. Once the project is handed over, the owner's ordinary property and business interruption policy takes over.

The insurance arrangements in the building contract matter too. The JCT explains that under its Insurance Options the works are insured by the contractor (Option A) or the employer (Option B), and that Option C applies to work in or extensions to existing structures. Our page on JCT insurance options A, B and C sets these out, and DSU should be aligned with whichever CAR policy responds.

What to check before buying or renewing

Is DSU linked to the same CAR or contract works policy, ideally with the same insurers, so there is no argument about whether the damage was insured?
Is the scheduled completion date clearly defined, and how is it adjusted if the programme changes for uninsured reasons?
Is the maximum indemnity period long enough for long-lead equipment, redesign and testing?
Is the time excess acceptable, and does it apply once per claim?
Have the feasibility study, programme, critical path and income projections been presented fairly? The Insurance Act 2015 duty of fair presentation applies.
Are funders and tenants noted correctly, and do loan agreements require additional interest cover?
Are transit and testing and commissioning risks included where the project depends on them? See also what CAR insurance is.

Apex arranges construction insurance, including CAR and DSU for project owners; a broker reads every enquiry.

Sources

Frequently asked

What is the difference between DSU and ALOP?

They are generally used to mean the same thing: insurance for income lost when insured damage during construction delays a project's completion. ALOP, or advance loss of profits, is the older term; delay in start-up is more common on larger and international projects. The policy wording, not the label, decides what is covered.

Does CAR insurance cover delay?

Usually not. Contractors' all risks insurance pays to repair or replace damaged works, plant and materials. It does not normally pay for the owner's lost income while the project is delayed. That income loss is what delay in start-up insurance is designed to cover, subject to its terms.

Who should buy delay in start-up insurance?

Usually the party that will earn income from the completed project, such as the employer, owner or developer. Lenders often require it or ask to be named. Contractors rarely buy it for themselves, because it protects the owner's anticipated revenue rather than the contractor's own costs.

What is a time excess in DSU insurance?

A time excess is a number of days of delay that the insured bears before the policy starts to pay. It is used instead of, or alongside, a monetary excess. The length is agreed when the policy is placed and should be shown in the schedule.

Will DSU pay if a project is late because of design changes?

Normally no. DSU responds to delay caused by physical damage insured under the linked CAR or contract works policy. Delays from design changes, planning, labour shortages or late supply without damage are generally outside cover.

Talk to a broker about this cover

Tell us what your business does, your turnover and any claims. A broker reads every enquiry and comes back with options. No fee for a quote. Or call 0117 325 0027.

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Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information, not advice on your individual circumstances, and it does not guarantee that cover will be available or on what terms.