Page 39 - The Insurance Times July 2025

Consumers

Dos & Don'ts : While Buying Project

Insurance in India

Dos o Exclusions

o Deductibles
1. Understand the Scope of Your Project
Assess the nature, size, complexity, and duration of your o Excess clauses
project. o Conditions precedent
Identify specific risks (e.g., fire, flood, third-party liabil- 8. Negotiate Policy Extensions
ity, delay in start-up). Consider maintenance cover, testing cover, off-site stor-
2. Choose the Right Type of Policy age, transit risks, and extended reporting period if rel-
Select appropriate policies like: evant.
o Contractors All Risk (CAR)
o Erection All Risk (EAR) Don'ts
o Contractors Plant and Machinery (CPM) 1. Don't Underestimate the Sum Insured
Avoid underinsurance-ensure sum insured reflects the
o Advance Loss of Profit (ALOP) / Delay in Start-up
full project value including escalation.
(DSU)
2. Don't Ignore Delay in Start-up (DSU) Cover
3. Disclose Complete Project Details
If the project has revenue or operational targets post-
Provide accurate information about:
completion, exclude DSU at your own risk.
o Site location
3. Don't Rely Solely on Broker Recommendations
o Construction materials
Validate coverage needs independently; some brokers
o Safety provisions
may push standard templates that don't suit your
o Subcontractor details project risks.
4. Include Key Stakeholders as Insured 4. Don't Delay Policy Purchase
Name owner, contractor, subcontractors, consultants, Always buy the policy before the project commences,
financiers as co-insureds to avoid coverage disputes. including storage and mobilization phase.

5. Evaluate Insurer's Claims History and Expertise 5. Don't Miss Reviewing Subcontractor Cover
Prefer insurers with experience in engineering/project Check whether subcontractors are covered under your
insurance and a strong track record of claim settlement. main policy or need to be insured separately.
6. Insist on Professional Risk Survey 6. Don't Overlook Claims Procedures
A pre-inspection or technical survey helps in risk identi- Understand timelines for notification, documentation
fication and premium negotiation. required, and on-site reporting obligations.
7. Read the Policy Document Carefully 7. Don't Skip Policy Audits During Project Lifecycle
Understand: Reassess insurance coverage if project scope changes,
o Inclusions cost escalates, or timeline extends.

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