Delay with no damage: what delay insurance does not do

The delay and natural event module set out the principle, and the half it did not treat must now be looked at. Advanced loss of profits cover is triggered by material damage, and by material damage that would itself be indemnifiable under the damage section. The name the market gives it, delay insurance, promises wider than it delivers. Delay arising from no damage stays outside, whatever it costs, and there is neither a trap nor unfortunate drafting in that: it is the very definition of the cover, written out in the opening article.

Yet the causes that actually move a large project's date are, for the most part, accompanied by no damage at all. A supplier filing for insolvency during manufacture, a congested port, a handling strike, a consent that does not come through, a design iteration adding three months: none of that breaks anything. The changing site module showed how ordinary these causes are on a long operation. They produce exactly the same effect on the programme as a fire, and not one of them meets the cover.

Meanwhile the delay penalty runs on every cause indifferently, unless excused by a relieving event provided for in the contract. The module separating the penalty from the loss said why it is not an insurance receivable. The calendar consequence must be drawn: the exposure runs across the whole range of causes, the cover across one family of them, and the gap is not a defect in the insurance contract. It is structural, and it is managed somewhere other than in the policy.

There is a second restriction, less well known, which closes even where damage did occur. On a large operation the critical item is often manufactured elsewhere, and it does not yet belong to the project while it is being built. Damage occurring in the maker's works strikes a thing that is not within the site policy's scope, and the resulting delay therefore does not arise from damage indemnifiable within the meaning of the cover. What the market calls the suppliers' extension serves that purpose, and it almost always carries two limits of different natures.

Those two limits deserve to be looked at separately, because only one bites at a time and it is not always the same one. There is a money limit, capping what is paid, and there is a cap in days, capping the length of delay taken into account whatever the actual length. On a short, expensive loss the money limit decides. On a long loss with a moderate daily cost it is the cap in days, and the available amount goes largely unused. Reading only an extension's money limit is to miss half of it.

The third point concerns replacement lead time, and it joins the indemnity period module. For a catalogue item, what governs is repair. For a bespoke item, what governs is the queue at the works that knows how to make it, and that queue does not shorten with money. A rotor, a power transformer, a heavy-wall shell run to dozens of weeks, and that duration is the same whether the loss is covered or not. It is set by the manufacturing market, not by the policy.

That leaves the strike, which the brief names and which must be cut in two. A strike on the site itself may come with damage, and it is on that side that the so-called civil commotion extensions live, which presuppose damage precisely. A strike at a supplier or in a port produces no damage: it produces lost time and nothing else. Both carry the same word in ordinary conversation and belong to two regimes with nothing in common, which explains most misunderstandings about what the policy would do on the day.