How to be sure you get the right insurance as a property developer?

Insurance for property developer & owners needs to be flexible to make sure you have the right cover in place whether you are renovating, refurbishing or looking at new build properties. As with all investment, there is an element of risk and your insurance policy needs to protect your business from these.

Although there could be a number of different parties involved in the process including builders, decorators, plumbers, and electricians ultimately the responsibility will fall with the developer. If anything was to go wrong you could be held liable for any costs, or a claim against you.

Whatever your level of experience and expertise, you will need to have quality insurance protection. Stanmore Insurance Brokers has many years of knowledge in this sector and can help you decide what insurance needs to be in place.

To ensure that the right policy is in place a key starting point is that insurers know exactly the type of work that is being undertaken. Does the development work include any specialist work such as underpinning, tunnelling or demolition? Or any materials containing asbestos? What about the type of properties being worked on, e.g listed buildings?

What cover should I be thinking of?

Key insurance considerations should include:

  • Public Liability Insurance – Legal liability in the event of a claim made by a member of the public for illness, injury, death or disease. Cover will also include third party property damage. It is important that the Limit of Indemnity is reviewed in the wake of the changes to the Ogden Discount Rate.
  • Employers Liability Insurance – This is required by law if employees or labour only sub-contractors are used. It is crucial to be aware that labour only subcontractors are to be insured under your own Employers Liability insurance.
  • Contract Works – This covers work that is in progress. It can provide cover to repair or replace work not yet completed if damaged or destroyed by an insured event such as fire, flood, storm or theft. If you think about the costs involved in a house extension for example, if there was a fire when the work was 90% complete the time and money invested in the project would be gone. Cover can be extended to plant, employee tools or hired-in plant if required.
  • Unoccupied Cover – Is the building due to stand empty for a period of time after completion? Unoccupied properties represent a different level of risk to insurers so a specialist Unoccupied Property policy may be needed.

 

 How to be sure you get the right insurance as a property owner?

You should have insurance for your property whether it be a single property or a portfolio of properties that you own. There is a variety of information that you should be providing to insurers to get the right level of cover and also at the right premium. This should include:

  • The value of the property – it is important to note that this should be the reinstatement value rather than the market value. We would also recommend that the property is valued at least every 5 years to ensure that this remains accurate.
  • The use of the property – is it commercial or residential? Or unoccupied?
  • Who is in the property – what type of tenant? If commercial – what type of business, if residential – is it working people, students or DSS? Is it multi-tenure?
  • Details on the property itself – structure, age, roof, details of any wooden floors etc.
  • What security is there at the property? This can extend beyond alarms or CCTV, for example, is there restricted access (such as keypad entry) or is their perimeter fencing/gates around the site?
  • Does the property have a history of flooding?
  • Full details of any previous claims at the premises.

All of the above (and more) will affect the premium insurers are able to offer, as well as the terms they can put forward.

What cover should I be thinking of?

Key insurance considerations should include:

  • Buildings & Contents – Naturally you should be insuring the building up to its full reinstatement value. For properties rented out do you have any fixtures and fittings in there? You should consider insuring these, too.
  • Property Owners Liability – It is possible that you may incur liability in your position as owner of a property for any costs or damages to a member of the public following in an injury. For example, if a tenant was to fall down the stairs due to poor maintenance they could take legal action for their injuries, medical expenses costs or loss of earnings. It is important that the Limit of Indemnity is appropriate.
  • Loss of Rent – Following an insured event such as a fire or flood, your property may be uninhabitable for a period of time and your tenant may have to find alternative accommodation. During this time you will not be receiving the rental income that you may have come to depend on, for mortgage payments for example. Loss of Rent cover can be included to cover against this eventuality. Cover can be set for different Indemnity Periods such as 12, 24 or 36 months however it is crucial that the sum insured is an accurate reflection of your rental income for this period.
  • Terrorism – This is not something that is included as standard under Property Owners insurance but cover can be extended. This is something that should be considered, particularly for any properties in city locations.

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