Delay in start-up claims

07 March 2017

Which projects require delay in start-up (DSU) cover? 

Projects where the owner would suffer a significant financial loss if completion was delayed. This could be either lost income or additional debt service costs.

What triggers a DSU claim?

Damage to the works, as covered under the construction policy, resulting in a delay to the project. There are also extensions available for losses at the premises of the insured’s supply chain.

How is a DSU indemnity calculated?

The calculation is the number of days late multiplied by financial value per day. 

Both elements can be difficult to calculate, especially when there are other, uninsured, causes of delay. It’s common for the contractor and owner to lack an understanding of the delay at the time of the incident – which often leads to conflict.

How is a delay assessed?

In addition to a loss adjuster, the insurer may appoint a delay analyst. It’s the delay analyst’s job to examine every detail of the project programme, and understand how and why it moved. The aim is to identify the precise progress of the project immediately prior to the loss, so that its impact is properly understood.

How do concurrent delays affect DSU claims?

Concurrent delay issues usually arise from other causes of late completion. They ‘trump’ insured delays, so there can be limited or no DSU policy response. This leaves the owner and contractor to dispute who suffers those losses.

How do you manage the insurance market during a DSU claim?

We encourage clients to work with insurers who understand the technical risks, when underwriting and when dealing with DSU claims. 

At JLT, we have an open dialogue during investigation, and a proactive approach to management and resolution.

What lessons can be learnt from DSU claims?

DSU claims highlight the benefits of project progress monitoring. Effective delay monitoring and post-incident delay analysis can prevent lengthy disputes.

Project progress monitoring, offered by companies like Capital Consulting International (CCi), provides robust progress verification for construction projects, and a transparent process for sharing information. 

For further information, please contact Patrick Harrington, Head of Construction Claims on +44 20 7528 4120