What DSU/ALOP Insurance Actually Covers
Delay in start up insurance Malaysia developers purchase for larger infrastructure and power projects covers a specific financial exposure: the loss of anticipated revenue or profit caused by a construction delay, following an insured physical loss during the construction period. It sits alongside, not instead of, a CAR or EAR policy — the CAR policy pays for repairing the physical damage; DSU pays for the income the project didn't earn because that damage pushed back its start date.
Advance Loss of Profits (ALOP) is essentially the same concept applied more broadly — sometimes used interchangeably with DSU, sometimes as a distinct product depending on the insurer and project structure.
Why This Gets Overlooked
Most construction insurance conversations focus on CAR and performance bonds because they're explicitly named in tender documents. DSU/ALOP is far less commonly mandated by the tender itself — it's usually a decision made by the project's financiers or developer, driven by their own risk assessment of what a delay would cost them, rather than a standard contractual requirement imposed on the contractor. That's part of why almost no Malaysian content discusses it directly.
Which Projects Typically Need It
- Power generation projects, where a delayed commissioning date means lost tariff revenue from day one of the delay.
- Toll road and highway infrastructure, where revenue only starts once the road opens to traffic.
- Large industrial plants, where financiers have modelled a specific revenue start date into their lending terms.
- Any project where a bank or financier has made a delay-cost calculation part of their lending covenant.
How DSU/ALOP Interacts with CAR
DSU/ALOP only responds following an insured event under the underlying CAR or EAR policy — it's not a standalone delay cover for any cause of delay (labour shortages or permit issues, for example, generally wouldn't trigger it). The sum insured is typically calculated based on projected revenue or profit over the indemnity period, requiring financial modelling input from the developer's own projections, not just construction cost figures.