Delay Start Up (DSU) Insurance in construction

A practical guide for Built-to-Rent, Co-Living and Purpose-Built Student Accommodation Developers

In construction, delays can translate into serious financial losses, especially for developers relying on timely rental income from Built-To-Rent (BTR) and Co-Living or Purpose-Built Student Accommodation (PBSU) schemes. Delay Start Up (DSU) Insurance protects against revenue loss caused by project delays following physical damage.

What is DSU Insurance?

Also known as Advanced Loss of Profits (ALOP) or Delayed Opening Insurance, DSU:

• Covers loss of income and fixed costs when a project cannot start operations on time
• Is only triggered by physical damage covered under a Contractor’s All Risks (CAR) policy
• Applies from the originally scheduled completion date

Key benefits for BTR, Co-Living and PBSA projects

Delays don’t just slow down a project, they impact viability. DSU Insurance can:

• Replace lost rental income during the delay period
• Cover ongoing fixed costs (e.g. utilities, wages, property management)
• Offset increased debt servicing costs (e.g. interest, penalties)
• Compensate for temporary relocation costs for incoming tenants

Core elements of a DSU policy

Coverage trigger:

• Physical loss or damage (e.g. fire, flood) insured under the CAR policy
• Must result in a delay to project completion

Financial losses covered:

• Rental income loss
• Operational expenses incurred during the delay
• Loan interest and financing penalties
• Additional operational or marketing costs

Common exclusions:

• Delays not caused by physical damage (e.g. supply chain issues, poor management)
• Losses occurring after operations begin
• Strikes, government restrictions, or uncovered natural catastrophes

Indemnity period:

• Pre-agreed time period (typically from 12 to 36 months)
• Starts from the intended completion date and ends when operations begin

Real-world example: BTR development

Scenario:

• A fire damages part of a BTR site 3 months before scheduled handover
• Completion is delayed by 6 months

Without DSU:

• Lost rental income for 6 months
• Ongoing operational costs without revenue
• Penalties or increased interest on financing

With DSU:

• Rental income covered for the delay period
• Fixed costs reimbursed
• Loan penalties or added interest compensated

Making a DSU claim: What you’ll need

Accurate documentation is essential. Typical evidence includes:

• Revenue forecasts showing expected income and costs
• Construction schedules proving the delay was caused by insured damage
• Lease agreements or pre-sales contracts showing lost income potential
• Loan agreements evidencing increased debt costs
• Invoices or payroll records for fixed costs still incurred during delay

Relevance for Co-Living and PBSA projects

Co-Living and PBSA developments often depend on short-term tenancy income and planned move-in dates. DSU helps by covering:

• Loss of income from signed tenancy agreements
• Temporary accommodation or relocation costs
• Extra marketing or incentives to fill delayed vacancies

Why DSU Insurance matters to you

For developers in income-generating residential sectors:

• DSU protects your revenue stream during insured delays
• It ensures financial resilience when external events disrupt delivery
• It’s a critical part of a well-structured construction insurance programme

Need help navigating DSU cover?

Kerry London’s specialist construction team works closely with developers, funders, and insurers to tailor the right cover for your project. We’ll help you:

• Understand your exposure
• Structure your CAR and DSU programme correctly
• Ensure your project is fully protected from start to start-up

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Kerry London is authorised and regulated by the Financial Conduct Authority. The company is a leading UK independent and Lloyd’s registered broker, which means that we work with a wide range of niche and major insurers.

This note is not intended to give legal or financial advice, and, accordingly, it should not be relied upon for such or regarded as a comprehensive statement of the law and/or market practice in this area. In preparing this note, we have relied on information sourced from third parties, and we make no claims as to the completeness or accuracy of the information contained herein. You should not act upon information in this bulletin nor determine not to act without first seeking specific legal and/or specialist advice. We and our officers, employees or agents shall not be responsible for any loss whatsoever arising from the recipient’s reliance upon any information we provide herein and exclude liability for the content to the fullest extent permitted by law.

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