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📋 '''Advance loss of profit (ALOP) insurance''' is a specialized form of [[Definition:Business interruption insurance | business interruption]] coverage designed for project owners or investors who stand to lose anticipated income when a construction or infrastructure project is delayed by an insured peril. Sometimes called delay in start-up (DSU) insurance, ALOP attaches to a specific project rather than an ongoing business operation, covering the [[Definition:Net profit | net profit]] and continuing [[Definition:Fixed cost | fixed costs]] the insured would have earned had the project been completed on schedule.

⚙️ Coverage typically sits alongside a [[Definition:Construction all-risk (CAR) insurance | construction all-risk]] or [[Definition:Erection all-risk (EAR) insurance | erection all-risk]] policy. When physical damage—fire, storm, equipment failure—delays the project beyond its planned completion date, the ALOP policy responds after a pre-agreed [[Definition:Time deductible | time deductible]] (often expressed in days or weeks) has been exhausted. The [[Definition:Indemnity period | indemnity period]] then runs until the project reaches the operational milestone defined in the policy, subject to a maximum period of indemnity. [[Definition:Underwriter | Underwriters]] evaluate the project's construction timeline, contractual penalties, projected revenue, and the quality of the contractor and [[Definition:Project management | project management]] team when pricing and structuring the cover.

💡 For lenders, equity investors, and project sponsors—particularly in energy, infrastructure, and large-scale real estate—ALOP insurance is a critical risk transfer tool because the financial exposure from delay can dwarf the cost of the physical damage that caused it. A six-month delay on a power plant, for instance, means six months of debt service with no revenue to offset it. Insurers and [[Definition:Reinsurance | reinsurers]] active in [[Definition:Engineering insurance | engineering lines]] view ALOP as a complex but profitable class, requiring close collaboration between property [[Definition:Underwriter | underwriters]], [[Definition:Loss adjuster | loss adjusters]], and forensic accountants at the [[Definition:Insurance claim | claims]] stage to quantify the actual financial impact of a delay.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Business interruption insurance]]
* [[Definition:Construction all-risk (CAR) insurance]]
* [[Definition:Erection all-risk (EAR) insurance]]
* [[Definition:Indemnity period]]
* [[Definition:Engineering insurance]]
* [[Definition:Contingent business interruption insurance]]
{{Div col end}}

Definition:Advance loss of profit (ALOP) insurance - Revision history

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