If you’re a regular visitor to this blog you would know by now that Property development is not a quick way to make guaranteed profits from your time and investment. The property developers path is full of risks. It’s why so many developers get insurance cover for any construction work they undertake. Now there’s a few specific Insurance areas of cover I’d like to outline below:
Public Liability - As a landowner you are responsible for any claims from site visitors and even trespassers (go figure!). These claims can be raised by injury or death that can be proven to be your fault.
Restrictive Covenants - The chances of buying a development property for a self build or development project with restrictive covenants applied by a previous owner could prevent you from carrying out your project. Restrictive covenant insurance gives developers peace of mind that where a restrictive covenant has been ignored or would prevent your project form going ahead you have financial security.
Defective Title - If the deeds or titles to your property are lost, missing or just inadequant you can protect your self from not benign able to continue with the project or loss of market value through Defective title insurance. Defective Title insurace could also protect you if the existing titles or deeds are unclear about rights of way, outstanding easements or any denial of access.
Building damage - Many Insurers of what is commonly known as ‘Self Build’ insurance or site insurance. A ‘Self build’ policy typically covers most areas of construction including;
- Subsidance – Incase of site movement during contraction
- Accidents & Injury – In case of any claim made against you from
Site insurance is a must if you are the main project manager or employ a main contractor. Even though your main contractor or sub contractors should have their own liability insurance it will not stop them potentailly making a claim against you should any employee have an injury that results in loss of work or worst still death.
JCT Clause 21.2.1 Insurance – This type of policy protects you from any loss or damage to surrounding property whilst the work is being carried out by a contractor or subbie. This policy may be worth considering if you are carrying out piling or underpinning that can cause significant movement to neighboring property.
Property development policies are very hard to compare as each insurance company or broker will ‘package’ their policies differently. In my experience I would write a list of the areas you would like a policy to cover and go through a broker. They’ll be able to find you the best deal based on your requirements rather than those of the insurance firm.
Do I need Insurance?
If you’re buying at auction or where you’re unable to see exactly what your buying (structurally or legally) then an insurance policy could provide you with the peace of mind to carry out the sael. Bear in mind that every poilicy will be dependant on certain criteria for it to be valid, so ensure you are able to provide the insurance company with the evidence they need before you go ahead and make a purchase. If you can’t provide the level of documentation needed it’s probably best to leave well alone.
If you’re planning to leave a property empty you’ll need to get additional renovation insurance or unoccupied home insurance which will cover you should the property be broken into or damaged in your absence. Normal Home Insurance policies only allow a home to be unoccupied for small period of time, so may not cover you during a renovation or period when you’re looking to let or sell a property.