Delay cover has been treated twice in this course: once for its general mechanics, once for its boundary with contractual penalties. There remains the parameter that decides its amount more surely than the limit, and which is chosen at placement in three minutes: the indemnity period. It is the maximum time over which the insurer will follow the delay, and it has nothing to do with the length of the actual delay. A project delayed fourteen months on a twelve-month indemnity period is indemnified twelve months, and the last two belong to nobody.
The mechanism is understood by separating three durations that are constantly confused. The actual delay is the gap between planned and actual commissioning. The deductible in days cuts off the start of that gap. The indemnity period caps its end. Between the two lies the indemnifiable share, and it is shorter than the delay at both ends at once. On heavy industrial projects, where an item is remanufactured in eighteen months as the module on value outside the fence showed, a twelve-month period is structurally too short, and it is nonetheless the most frequent because it is what is offered by default.
The second difficulty is that the period runs, and one must know from when. It starts at the commissioning date set in the contract, and not at the date of the loss nor at the end of repairs. That precision produces a counterintuitive effect: a loss occurring very early in the project, whose consequences appear only at the end, consumes its indemnity period from a date that stays fixed. And if the project was already late before the loss, that pre-existing delay does not shift the starting point either, which the module on reconstructing delay approached from the angle of attribution and which reappears here from the angle of the calendar.
The content of the indemnity deserves attention of its own, because the words business interruption mislead. What is indemnified is not turnover but gross margin, that is, what the operation would have generated once the charges that do not run when nothing turns are removed. Where the wording provides for it, fixed charges continuing despite the stoppage are added, and above all financing costs, which on a debt-financed project are the heaviest and most certain head: interest runs whether the plant produces or not, and a six-month delay means six months of interest on the whole drawn debt.
The business plan on which all this is computed is the arrangement's most fragile object, and it must be fixed before the loss. A project with no operating history can produce only a forecast, and a forecast prepared after a loss is suspect by construction, whatever its quality: whoever writes it knows the amount it hopes to obtain. Serious wordings therefore require revenue, price and volume assumptions to be lodged at placement. That lodging is experienced as a formality and is in reality the document that will make the difference, because it turns a negotiation into an application.
A consequence of that reasoning sometimes turns against the insured and must be known. If the market has deteriorated between placement and commissioning, the actual margin of the delayed operation would have been lower than the business plan, and the indemnity principle requires indemnifying the actual loss and not the forecast one. An energy project whose selling price collapsed during construction therefore suffers a delay that costs it less than announced, and the indemnity follows that reality. The business plan is a computation ceiling, never an acquired right, exactly like the daily figure described in the module on penalties.
That leaves the check that makes all this workable and is done once, before placement. Take the item with the longest remanufacturing lead time on the project, add dismantling, transport and re-erection, add requalification, and compare that total with the indemnity period offered. If the total exceeds the period, the gap is an uncovered amount whose order of magnitude is known in advance, and that is a decision to take knowingly rather than a flaw to discover. That comparison takes half a day, it bears on three or four items only, and it is the only one linking a contractual duration to the project's industrial reality.
A production unit is due to start on April 1, 2025. In January 2024, fourteen months earlier, a covered fire destroys a main compressor. The remanufacturing lead time is sixteen months, plus two months of transport and re-erection and one month of requalification. Actual commissioning takes place on August 20, 2026. Delay in start-up cover carries a 45-day deductible, a 12-month indemnity period, and a business plan daily gross margin of 28,000 euros. Before the loss, the project was already two months late for reasons attributable to the works. Finally, the product's selling price fell 20% between placement and 2026, so the actual margin observed at start-up is 22,000 euros a day. What does the project owner receive?
The dates must be laid out before counting, and above all one must not start from the total delay. Planned commissioning is April 1, 2025, actual commissioning August 20, 2026, that is 506 days of slippage. Of those 506, two months were already accrued before the loss and are not attributable to it: the share attributable to the damage is around 445 days. The 45-day deductible cuts off the start, leaving about 400 days. But the 12-month indemnity period runs from April 1, 2025, a fixed date, and not from the end of the deductible: it therefore closes on April 1, 2026, and everything after that is uncovered. The indemnifiable share is thus capped at 365 days less the 45 of deductible, that is 320 days, and not the 400 the delay calculation suggested. Finally comes the margin: the business plan says 28,000 euros, reality says 22,000, and the indemnity principle imposes the second. The indemnity is therefore 320 times 22,000, that is 7.04 million euros, where a naive calculation, 506 days at 28,000, would have announced 14.17 million. The non-obvious point is that the file's costliest parameter is neither the deductible nor the margin: it is the twelve-month period, chosen at placement against an item whose remanufacturing lead time alone was sixteen.
- 01Three durations are confused: the actual delay, the deductible cutting off its start, and the indemnity period capping its end. The indemnifiable share is shorter at both ends at once.
- 02The period runs from the PLANNED commissioning date, a fixed date: neither the loss, nor the end of repairs, nor a pre-existing delay shifts it.
- 03What is indemnified is gross margin and not turnover, and on a financed project financing costs are the heaviest and most certain head, interest running whether the plant produces or not.
- 04The business plan is a computation ceiling, never an acquired right: if the market has deteriorated, the indemnity follows the actual margin and not the forecast one.
- 05The check that matters is made before placement: the longest remanufacturing lead time on the project, plus transport, re-erection and requalification, compared with the period offered.