Understanding difference between "Put to Use" cover and "Continuity cover" under project insurance policies

Project insurance policies exclude part of project which is completed and put into use for intended purpose.
By virtue of taking "Put into use" add on cover, insured buys back this exclusion with certain loss limits and period as defined in add on cover by the insurance company.
Say for example, it can be given for a loss limit of rupees 10 crores for a period of 6 months. That means, any loss or damage to insured property which is put into use up to  rupees 10 crores shall remain covered under the policy up to a maximum period of 6 months or the expiry of policy, whichever is earlier.
Continuity cover is granted in projects where integral testing is required after erection of all plant and machineries before final commissioning of plant.
As per this addon cover, any machinery which is tested and commissioned but is required  to wait for completion of remaining portion of plant, shall be allowed to remain covered under the policy till successful completion of integral testing of whole of the plant including the machinery in question.
Here also, the duration of continuity cover is defined subject to warranty that machinery, so selected for continuity cover, will remain silent and will not be used for commercial production till successful completion of integral testing of complete plant and machinery.

Comments

  1. Animesh BOctober 12, 2020 at 9:36 AM

    Sir, is there any difference between Integral testing & Cold testing?

    Please correct my interpretation in the following example taken for understanding -

    Project ''P'' has three phases-A,B & C. Phases A,B & C has 3 independent contractors X, Y & Z respectively. Continuity of cover extension is opted in the EAR policy taken by Y for phase B with 6 months limit.

    Due to the extension opted, total Sum Insured for phase B is covered if integral testing of the entire Project ''P'' is completed within 6 months from the date of commissioning of Phase-B.

    ReplyDelete
    Replies
    1. V.P SharmaOctober 12, 2020 at 8:33 PM

      Cold testing is different than integral testing because integral testing involves hot testing of of entire plant as a whole unit.
      Continuity cover starts after completion of testing and commissioning of a particular unit or part of project which is required to wait for completion of remaining units of the project to participate in integral testing of whole plant.
      If the period allowed for continuity cover is 6 months and integral testing commences after expiry of this period then the completed portion shall remain uncovered till commencement of integral testing.
      Hope you got the clarity

      Delete

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