Assessing Commercial Property Insurance for Developers: Professional Liability, Environmental, Builder's Risk Policies

Description

Real estate counsel must prepare to advise commercial real estate developers on the extent of necessary and adequate insurance. Most developers carry a commercial general liability policy. However, CGLs may not fully protect a developer against all risks during development. CGL policies address third-party claims involving bodily injury and property damage. They do not cover damage to the developer's own property, or professional or environmental risks.

The owner or general contractor on a project can purchase OCIP or CCIP, sometimes referred to as "wrap-up insurance," on behalf of all the development participants, such as the contractors, subcontractors, architects, and engineers. Though developers require all contractors working on a project to maintain insurance coverage, numerous participants' individual policies inject more risk into a project. A wrap-up policy can reduce finger-pointing and avoid possible coverage gaps by including all parties under one master general liability policy.

Real estate development and construction professional liability insurance is unique because it insures against real estate developers' professional services and can provide an additional layer of insurance for the construction and design professionals that they hire.

Some commercial redevelopment involves EPA-designated brownfields or other properties requiring remediation. Any project with potential environmental risks should be evaluated for environmental insurance coverage. Counsel must review the project due diligence and advise developers on the risk of failing to account for this liability exposure.

Construction projects must adhere to strict schedules to avoid costly delays. Builders' risk policies minimize delays by ensuring a quick resolution if a property claim occurs on a construction project. These policies also insure against accidental loss or damage to contractors' work and property during construction and extend coverage to project equipment, materials, and supplies. Builders' risk policies can include the owner, general contractor, and subcontractors.

Listen as our expert panel addresses the major types of insurance a real estate developer may need and how counsel can review and assess a developer's needs to assist in deciding on the policies necessary to handle a particular project's unique circumstance.