Page 39 - The Insurance Times March 2025

Technical Glossary

Technical Glossary on Engineering and Project

Insurance

Advance Loss of Profits (ALOP): A type of insurance Erection All Risks (EAR) Insurance: Covers risks during
covering financial losses due to project delays caused the erection and installation of machinery and equip-
by insured risks. ment.
All Risks Policy: A comprehensive insurance policy cov- Force Majeure: Unforeseeable circumstances prevent-
ering all risks except those specifically excluded. ing project completion, such as natural disasters.
Bid Bond: A surety bond ensuring that a contractor will Final Acceptance Certificate (FAC): A document con-
undertake the project if awarded the contract. firming project completion as per contract specifica-
Builders' Risk Insurance: Insurance covering damage tions.
to a construction project during the building phase. Hazard Analysis: Assessment of potential risks in engi-
Business Interruption Insurance: Coverage for lost in- neering and construction projects.
come due to a covered peril disrupting normal business
Hold Harmless Agreement: A contract clause where
operations.
one party assumes liability for specific risks.
CAR (Contractor's All Risks) Insurance: A policy cover- Material Damage Insurance: Covers physical damage
ing loss or damage to the construction project and third-
to assets used in engineering and construction projects.
party liabilities.
Occupational Hazard: Risks associated with construc-
Construction Defects Insurance: Coverage against de-
tion and engineering activities.
fects in design, workmanship, or materials.
Time Element Coverage: Insurance covering losses re-
Completion Bond: A guarantee that a construction
project will be completed as per the contract. lated to project delays.
Valuation Clause: Defines how losses are valued in an
Contingent Liability: The potential risk arising from un-
certain future events in construction projects. insurance claim.
Vicarious Liability: Liability incurred for the actions of
Deductible: The portion of an insurance claim that the
insured must pay before the policy coverage starts. subcontractors or employees.

Delay in Start-Up (DSU) Insurance: Protects against Yield Loss Insurance: Covers financial losses due to re-
financial losses due to project delays caused by insured duced productivity or performance failures.
perils. Zero Depreciation Policy: Insurance coverage that re-
Design & Construct Insurance: Coverage for risks re- imburses the full cost of damages without accounting
lated to design errors and construction defects. for depreciation.

Fire insurance premiums could surge 60% in 2025

Fire insurance premiums could experience 60 percent growth in 2025, after general insurance companies slashed
discounts in property insurance premiums by up to 100 percent in January this year. The property insurance sector
experienced an 80 percent increase in premiums on January 1, 2025, aimed at correcting the pricing after a period
of aggressive discounting. The steep increase also follows a collective industry decision to eliminate discounts and
align premiums with rates recommended by the Insurance Information Bureau of India (IIB), which considers burning
cost rates and guidelines from the Society of Domestic Fire Insurers (SDFI).

The Insurance Times March 2025 35