36.

Advance Loss of Profits Insurance

The Insurers shall indemnify the Insured - named as Principal in the Schedule to Section I
of this Policy - in respect of the loss of gross profit actually sustained due to the
reduction in turnover and the increased cost of working as defined in this Section, if at
any time during the period of insurance stated in the Schedule to this Section any or all
the Insured items suffer loss or damage covered under Section I of this Policy, unless
specifically excluded in this Section, thereby causing an interference in the erection work
and/or testing schedule resulting in a delay of commencement of and/or interference
with the Insured business, hereinafter referred to as “the delay”.

The amount payable as indemnity hereunder shall be:

 in respect of loss of gross profit: the sum obtained by applying the rate of gross profit
to the amount by which the actual turnover during the indemnity period fails short of
the turnover which would have been achieved had the delay not occurred;

 in respect of increased cost of working: the additional expenditure necessarily and

reasonably incurred for the sole purpose of avoiding on diminishing the reduction in
turnover which, without such expenditure, would have taken place during the
indemnity period, but not exceeding the sum obtained by applying the rate of gross
profit to the amount of the reduction in turnover thereby avoided.

If the annual sum insured hereunder is less than the sum obtained by applying the rate
of gross profit to the annual turnover, the amount payable shall be reduced
proportionately.

Definitions
Period of Insurance

The period of insurance shall be the period stated in the Schedule to this Section,
terminating on the date specified in the Schedule or on any earlier date when the EAR
material damage cover of Section I ceases.

Scheduled Date of Commencement of the Insured Business

The provisional date stated in the Schedule to this Section or any revised date upon
which the business would have commenced had the delay not occurred.

Indemnity Period

The period during which the results of the business are affected in consequence of the
delay, beginning on the scheduled date of commencement of the insured business and
not exceeding the maximum indemnity period stated in the Schedule to this Section.

Time Excess

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The period stated in the Schedule to this Section for which the Insurers are not liable.
The corresponding amount shall be calculated by multiplying the average daily value of
loss sustained during the indemnity period by the number of days agreed upon as the
time excess.

Turnover

The amount of money (less discounts allowed) paid or payable to the Insured for goods,
products or services sold, delivered or rendered in the course of the Insured business
conducted at the premises.

Annual Turnover

The turnover which, had the delay not occurred, would have been achieved during the
12 months after the scheduled date of commencement of the Insured business.

Annual Gross Profit

The amount by which the value of the annual turnover and the value of the closing stock
exceeds the value of the opening stock and the amount of the specified working
expenses. The value of the opening and closing stocks shall be calculated in accordance
with the Insured’s normal accounting methods, due provisions being made for
depreciation.

Specified working expenses shall be any costs incurred for the acquisition of goods; raw
materials or auxiliaries as well as for supplies (unless required for the upkeep of
operations) and any costs for packaging, carriage, freight, intermediate storage,
turnover tax, purchase tax, licence fees and royalties for inventors, etc., insofar as such
costs are dependent on turnover.

Rate of Gross Profit

The rate which, had the delay not occurred, would have been earned on this turnover
during the indemnity period.

Special Exclusions applying to Section III

The Insurers shall not be liable for:

1. loss of gross profit and/or increased cost of working due to any delay caused by
or resulting from;

1.1 loss or damage covered under Section I by way of endorsement, unless it has
been specifically agreed in writing;

1.2 earthquake, volcanic eruption, tsunami, unless it has been specifically agreed in
writing;

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1.3 loss of or damage to surrounding property, construction machinery, plant and
equipment;

1.4 loss of or damage to operating media or feedstock, shortage, destruction,

deterioration of or damage to any materials necessary for the insured business;

1.5 any restrictions imposed by a public authority;

1.6 non-availability of funds;

1.7 alterations, additions, improvements, rectification of defects or faults or

elimination of any deficiencies carried out after the occurrence;

1.8 loss or damage to items taken over or taken into use by the insured or for which
cover under Section I to this Policy has ceased;

2. any loss due to fitness or damages for breach of contract, for late or non-
completion of orders, or for any penalties of whatever nature;

3. loss of business due to causes such as suspension, lapse or cancellation of a

lessee, licence or order, etc., which occurs after the date of actual
commencement of the business.

Provisions Applying to Section III

Memo 1 - Extension of Period:

Any extension of the period of insurance under Section I of this policy shall not
automatically lead to an extension of the period of insurance stated in the Schedule to
this Section.

Any extension of the period of insurance under this Section of the Policy shall be
requested in writing as early as possible by the Insured, stating the circumstances
leading to the need for extension, and shall have effect for this Section only if specifically
agreed upon in writing.

Any alteration of the scheduled date of commencement of the insured business shall be
reported and shall have effect for this Section only if specifically agreed upon in writing.

Memo 2 - Basis of Loss Settlement

In calculating the rate of gross profit and annual turnover, the following points shall in
particular be taken into consideration:

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a) the results of the insured business for the 12 month period after commencement,
b) variations, and special circumstances which would have affected the Insured business
had the delay not occurred
c) variations and special circumstances affecting the Insured business after
commencement.

so that the final figures represent as closely as may be reasonably practicable the results
which the Insured business would have obtained after the scheduled date of
commencement had the delay not occurred.

Memo 3 - Return of Premium

If the Insured declares (certified by the Insured’s auditors) that the gross profit earned
during the accounting period of twelve months following the commencement of the
Insured business or the date on which but for the delay the business would have
commenced was less than the sum insured thereon, a pro rata return of premium not
exceeding one third of the premium paid shall be made in respect of the difference.

If any loss or damage has occurred giving rise to a claim under this Policy, such return
shall be made in respect only of so much of said difference as is not due to such damage.
Special Conditions Applying to Section III

1) The Insured shall present the Insurers with updated progress reports at Intervals
stated in the Schedule to the Section.

2) In the event of any material change in the original risk such as:

a) changes of the envisaged progress programme, testing procedure etc.

b)alteration, modification or addition to any item of machinery or work etc.

c) departure from prescribed construction or operation conditions,

d) changes in the Insured’s interest (such as discontinuation or liquidation of the

business or its being placed in receivership)

taking place, the Policy shall be void unless its continuance be agreed by
memorandum signed by the Insurers.

3) In the event of any occurrence which might cause a delay and give rise to a claim
under this section:

a) the Insured shall immediately notify the Insurers by telephone or telegram

and send the written confirmation thereof within forty-eight hours of the
occurrence;

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 b) the Insured shall do and concur in doing and permit to be done all such things
as may be reasonably practicable to minimize or establish the extent of any
interference with the erection work and/or testing schedule so as to avoid or
diminish any delay resulting therefrom.

c) the Insurers and every person authorized by the Insurers shall, without
prejudice to any party Insured by this Policy, have access to the erection site
where such loss or damage has occurred for the purpose of direct negotiation
with the responsible contractor or subcontractor in order to establish the
possible cause and extent of the loss or damage, its effect on the insured
items, to examine the possibilities for minimizing any delay to the scheduled
date of commencement of the insured business, and if necessary to make any
reasonable recommendations for the avoidance or minimization of such
delay.

This condition shall be evidence of the leave and licence of the Insured to the
Insurers so to do. If the Insured or anyone acting on his behalf hinders or
obstructs the Insurers during any of the above mentioned acts or does not
comply with such recommendations of the Insurers, all benefits under this
Section shall be forfeited.

4) In the event of a claim made under this Section, the Insured shall at his own
expense deliver to the Insurers not later than thirty days after the delay or within
such further periods as the Insurers may allow in writing a written statement
setting forth particulars of his claim. Furthermore, the Insured shall at his own
expense produce and furnish to the Insurers such books of account and other
business books, e.g. invoices, balance sheets and other documents, proofs,
information, explanations or other evidences as may reasonably be required by
the Insurers for the purpose of investigating or verifying the claim, togetherwith -
if required - a statutory declaration of the truth of the claim and of any matters
connected therewith.

5) The indemnity shall be payable one month after the final determination of its
amount. Notwithstanding this above, the Insured may, one month after the
Insurers have been duly notified of the loss and have acknowledge their liability,
claim as advance payment(s) the minimum amount(s) payable under the
prevailing circumstances.

The Insurers shall be entitled to postpone payment:

a) if there are doubts as to the Insured’s right to receive payment, until the
necessary proof is furnished;

b) if, as a result of any loss or damage or any delay to the anticipated date of
commencement of the Insured business, policy or criminal investigations
have been initiated against the Insured, until the completion of such
investigations.

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The Insurers shall not be liable to pay interest on indemnity moneys withheld other than
interest for default.

Details Required for ALOP Cover

ALOP FOLLOWING EAR

1. Project details
2. PML of the risk
3. Latest risk inspection, if any
4. Bar Chart
5. Total premium under basic EAR policy
6. Critical items and their respective values
7. Replacement time of each of the critical items
8. Bifurcation of imported and indigenous items and their values
9. Project progress monitoring report

ALOP FOLLOWING MARINE

1. Shipment schedule including start date of shipment

2. Port of loading/unloading
3. Inspection report while loading
4. Bar chart of the project
5. Total premium under basic marine policy along with deductibles
6. Origin of Critical items and their respective values
7. Replacement of time of each of the critical items
8. Bifurcation of imported and indigenous items and their values
9. Per bottom/conveyance limit
10. Percentage of cargo that may be containerized
11. Start date of construction

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