Delay in Completion Insurance provides financial protection against project delays due to covered property losses, covering lost income, interest, and soft costs. Key for developers and project owners relying on strict timelines.
Delay in Completion Insurance
What Is Delay in Completion Insurance?
Delay in Completion (also known as Delay in Start-Up or DSU) is a Builders Risk add-on that covers lost revenue, rental income, or financing costs when a project is delayed due to a covered physical loss (e.g., fire, theft, storm).
Who Needs Delay in Completion Insurance?
If a loss occurs mid-construction and delays project delivery, owners or investors could face missed rent, penalties, loan interest, or operational losses. DSU fills this financial gap.
Common industries that often require Delay in Completion Insurance include:
- Developers with pre-leased or pre-sold projects
- Project owners with construction loans
- Hospitality or retail builds with scheduled openings
- Renewable energy and infrastructure developers
What Does Delay in Completion Insurance Cover?
Delay in Completion Insurance typically covers:
- Lost rental income
- Lost business income
- Interest payments on loans
- Additional soft costs and penalties
- Some coverage for fixed operating costs
What Doesn’t Delay in Completion Insurance Cover?
While Delay in Completion Insurance offers broad protection, it doesn’t cover:
- Delay due to poor weather or supply chain (unless resulting from insured peril)
- Labor strikes or poor planning
- Force majeure unless specifically endorsed
- Coverage outside of policy period
How Much Does Delay in Completion Insurance Cost?
The cost of Delay in Completion Insurance varies based on factors like type of business, project size, duration of project, location, and claims history.
Key Cost Factors:
- Project size and revenue forecast
- Type of business or lease terms
- Project schedule and duration
- Risk of delay based on location and construction type
Typical Cost Range:
- Pricing: 0.1%–0.3% of anticipated revenue or loan value
- Example: A $2M anticipated income = $2,000–$6,000 for coverage
Risk Management Tips
To minimize potential claims:
- Establish a detailed construction schedule with realistic milestone targets.
- Document causes and resolutions for any project delays.
- Secure long lead-time materials well in advance to avoid supply chain disruptions.
- Require contractors to carry performance bonds or liquidated damages clauses.
- Keep up-to-date weather and permit records in case delays are due to uncontrollable events.
- Review subcontractor insurance and performance history before engagement.
Talk to An Expert
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Schedule a consultation to see how Alliance Risk can reduce your insurance risk.
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