Principles of Project Finance

policies. This provides that even if another insured party does something to

vitiate (i.e., invalidate) the insurances (e.g., failure to disclose material infor-

mation), this will not affect the coverage provided to the lenders. This can be

a very difficult area to negotiate with the insurer, as it may add to their poten-

tial liability in a way that is not usual. In fact, in tighter insurance market con-

ditions, it may not be possible to get the insurer to agree, and in such circum-

stances—if their insurance adviser advises there is no choice—lenders have

to live without it.

It is sometimes possible to obtain separate coverage for this risk, and in

some jurisdictions it may be dealt with by naming the lenders as additional

insured parties and including ...