Definition:Delay in start-up (DSU) insurance
🏗️ Delay in start-up (DSU) insurance is a specialized coverage designed to protect project owners, developers, and lenders against the financial consequences of a delayed completion of a construction or engineering project caused by an insured peril such as fire, natural disaster, or equipment breakdown. Often written as an extension to a construction all-risk or erection all-risk policy, DSU insurance responds to the consequential revenue loss or increased financing costs that arise when physical damage pushes the project's operational start date beyond the planned timeline. It sits at the intersection of property and business interruption coverage, tailored specifically for the pre-operational phase.
⚙️ When a covered physical damage event delays project completion, the DSU component indemnifies the insured for quantifiable financial losses during the extended period. These typically include lost gross profit or revenue the project would have generated, ongoing debt service and financing charges, fixed operating costs that continue to accrue, and contractual penalties for late delivery. The policy specifies an indemnity period — the maximum duration for which losses are covered — and usually incorporates a time deductible (often expressed in days or weeks) that functions analogously to a waiting period. Underwriters evaluate DSU risks by examining project timelines, revenue projections, financing structures, and the nature of the construction itself, often requiring independent engineering assessments before quoting.
💰 For large-scale infrastructure, energy, and industrial projects where capital commitments run into hundreds of millions of dollars, the financial exposure from a six-month or twelve-month delay can be catastrophic. DSU insurance transforms this exposure from an unmanaged balance-sheet risk into a structured, transferable one. Project finance lenders frequently mandate DSU coverage as a condition of funding, recognizing that physical damage alone is only part of the financial picture — the downstream economic impact of delay often dwarfs the repair cost itself. Across the specialty and London market segments, DSU remains a technically demanding class, requiring close collaboration between loss adjusters, forensic accountants, and engineering consultants when claims arise.
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