Guiding your property owning customers through the maze of bank interest clauses
Project Cargo what is covered?
Physical Loss or Damage cover under the Material section of the Cargo Cover and not explicit excluded in the DSU(Delayed Start-up) Cover Which Clause do we use? London E.C. Bruce Endorsement under the Cargo Cover or equivalents in the local markets
Project cargo insurance is coverage for equipment destined for infrastructure projects and Industrial facilities. Policy coverage includes physical loss & damage and may include consequential loss, such as delay in start-up (DSU) and additional cost of working. Significant limits are required
Insurance coverage is typically driven by banks, and the project’s construction placement followed by other coverages, including cargo. Increased traditional reinsurance participation in emerging markets – with particular focus on Middle East, Latin American and Asia
The Project Cargo Time Schedule
-50 / 50 Clause
-RM, PBRM etc.
-03 construction value at the end of the project 01 02 maintenance
-TRC/TRM & DSU Hot testing Cold testing Sea, air or land cargo transportation property, BI, Construction or TPL etc. Erection period Time
Provisional Deductible ………………………………………………./Indemnity Period………………Months
Maximum Indemnity Period
Final CAR / EAR & DSU Period Original Transport Period Time
Important Considerations It is essential that underwriters also insure the physical loss or damage insurance (cargo policy) in conjunction with the consequential loss policy, as control by the underwriters is vital. Preferably they will be written as two sections of the same policy with the loss of profit claim triggered by a loss under the material damage cargo section. Thus any condition or warranty imposed by Underwriters on the cargo policy will similarly affect the advance loss of profit coverage.
Important Considerations Otherwise the consequential loss underwriters would have no control over the damaged cargo and would be unable to influence the course of action. The assured would have to submit any claims separately to two sets of insurers who may not adopt identical positions. With the same underwriters the claim will be dealt with by one Claim Department in conjunction with the Underwriter who assessed and wrote the risk in the first instance. Therefore an overall view would be adopted minimizing the loss to both insurers
Important Considerations It also ought to be remembered that the value of any one item or part of one item has little bearing on its significance to loss of profit Underwriters. An All Risks Underwriter receives premium based on the value and the claim is paid relative to that value
For the consequential loss Underwriter, loss or damage to quite low value items which are vital to a contract might result in an entire plant being inoperable if repairs or replacement parts are not quickly available.
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