Commercial and Residential Developers Practice

From commercial to residential to public transit to public works, real estate developers are always bidding on or finding investments and undertaking small and large projects. Buying Land, parts of deals, etc.  T


Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

At CBI we have the markets for the coverages you need, want or have, including:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 
In today's times, there are several OTHER coverage's that you need, that you may not know exists, or how coverage wouldl apply if certain claims scenarios were to occur.  

 EXPOSURE POINT 1-Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 Claims Examples under Real Estate Professional coverage:


(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.
(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.


In this particular situation with both the architect and developer, bring suit against each other. The architect firm decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 EXPOSURE POINT 2-Pollution or Environmental Insurance:  Either Blanket or Site Specific Coverage for pollution incidents that occur on a particular project, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up as well as damages resulting for the sudden, accidental or release of pollutants on a particular job or in general.

 Claims Examples under Environmental Insurance coverage:

(1) Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
(2)Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 















EXPOSURE POINT 3 Cyber-Liabity Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

Commercial and Residential Developers

From residential to public transit to public works, developers are always bidding on and undertaking small and large projects. Buying Land, parts of deals, etc.  This is a great class of business from an insurance standpoint as these opportunites are fairly large.

Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

Coverages they all need, want or have:

Master Property Policies on all of their finished assets under lease or rent or for sale
General Liability Coverage
Builders Risk Coverage on blanket basis to cover houses or commercial buildings for damage during construction-THESE POLICY FORMS VARY IMMENSELY-see comments below
Workers Compensation Coverage for all of their direct employees
Commercial Auto for owned fleets and non-owned for subcontractors
Commercial Umbrella Coverage

 

Coverages that they need, that they may not know exists:

 

Real Estate Development “Professional Liability”- insures against those usual services and transactions conducted by real estate developers. For instance, a real estate development professional liability insurance policy can provide coverage for “wrongful acts” committed by a developer during the preparation, negotiation, transmittal, and awarding of design and construction bid packages; while obtaining proper permits, variances, consents, and easements; related to management, supervision, and coordination of design and construction; and regarding other issues with real estate agents, title companies, and property managers.  Many will provide these services IN HOUSE, which actually can compound the exposure.

 

Claims Examples under Real Estate Professional coverage:

 

(1)A developer completes a development of several homes. Three years later, several homes’ foundations crack because the developer did not have the site properly graded. The affected homeowners collectively bring suit against the developer and general contractor. Since the developer acted as a construction manager and/or the responsible party for obtaining and preparing the grading plan, the claim could fall outside of a General Liability policy. Coverage for cracking that arose from design errors or failure to manage the construction would be considered under a Professional Liability policy.

 

(2) A developer engages an architect firm to design a structurally unique apartment building. As a result of the unique design, project costs are 15% above initial proposals. The developer “explains” the unique architecture and convinces outside investors that the artistic nature of the structure will demand higher rent and effectively improve their investment opportunity. A design change is mandated at the Code Enforcement administration, and the new design ultimately adds 6+ months to completion date due to revised permitting.

 

 

 

Claims Examples under Real Estate Professional coverage: (continued):

 

The investors, after unsuccessful negotiations with both the architect and developer, bring suit against both. The architect firm, in an effort of cost containment, had decided to lower their professional liability limit to $500,000; in addition, unbeknownst to the developer, the architect had already exhausted over $200,000 of that limit by fighting a similar claim on another out-of-state project. Coverage would be considered under the developer’s Professional Liability policy to respond to such allegations of design coordination and supervision errors or omissions.

 

 

Environmental Insurance:  Site Specific Coverage for pollution incidents that occur on a certain site, as well as blanket coverage for pollution type claims for any or all projects. These sorts of policies vary immensely, but generally cover environmental contamination that requires clean-up

 

Claims Examples under Environmental Insurance coverage:

Contaminated Soil-A residential contractor unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
Developer contracts with sub to install sewer lines in new subdivision.  Sub hits existing sewer pipe causing ruptured Pipeline-The street/road contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured the unmarked pipeline. The contents were released into the subsurface soil and groundwater because of the contractor’s inadequate response to the rupture and limited coverage, the developer was hit with the balance of the claim, after $100,000 was paid out with insurance, the rest was on the developer.

 

Cyber Liability/Cyber Risk:  Developers maintain all sorts of data, on potential buyers as well as their own employees.  Cyber Insurance protects the developer from claims and expenses arising out of Cyber-attacks whether the occur over the internet, or simply from the hacking of the developer’s computer hardware system, communication media errors, system backup and operating system errors and even errors and fraud involving internal people like system administrators.

 

     A company can face three common types of cyber risks:

Natural: The most common errors and losses result from severe weather. For example, a lightning strike or power surge can severely damage or destroy an entire database.
Human error: These unintentional acts can involve something as simple as leaving a laptop that has access to a developer’s client base, at the airport.
Intentional: This involves illegal criminal activity and can occur outside the organization, by hackers or criminals, or inside the organization

 

 

 

 

 

 

Builders Risk Insurance:

Builders Risk Insurance is often used with a different term that describes what the insurance does - Course of Construction Insurance. Builders Risk Insurance covers a building, and typically all materials during construction. Protection can be extended for the work of individual contractors, architects and engineers. Optional coverage can often be added for soft costs not directly related to construction such as marketing, loss of income and delayed completion.

Testing Coverage and Mechanical Breakdown coverage are two great endorsements.

This coverage is hand in hand just about as important as a performance or payment bond.

 

Builders Risk Claims Scenarios:

Insured is completing a large federal project, that includes the installation of several large motors and switch gears. During the course of the final walk through the system is started up for the first time.  As the system starts, there is a large arching incident due to the Electrical Contractors faulty work causing arching damage to the motors in excess of $600,000.

 

The Electrical Contractors Liability Insurance DID NOT cover this damage as it was considered damage to their work, specifically excluded. 

 

Luckily, the Builder Risk Form, had been endorsed with the proper “Testing Coverage” thus paying the loss when most forms (without requesting this specific endorsement) would not have applied.

 

A large developer is constructed a $20,000,000 multifamily Apartment complex.  There is a time crunch, and the developer is not able to line up his contactors, so he is forced to store $200,000 of windows and casements in a contractor’s yard-OFFSITE.  A large hail and wind storm damages the entire inventory.  Unfortunately, the Builder’s Risk policy had only built in $50,000 for off premises/Temporary storage coverage, thus the balance went uninsured.

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