Property Developers & Commercial Property Owners, BEWARE or rather BE-AWARE
It would be wrong to assume that property insurance covers will always be readily available at cost effective terms and should not be taken as a given.
Commercial property insurance underwriting is more advanced than ever and this ensures that underwriters get the right rate for the job, if they wish to take on the risk in the first place. The commercial property owner’s insurance market has seen a significant downturn in profitability in recent years and in particular, developers need to give some forethought to the cost and availability of cover down the line.
So, what are the problems??
- Levels of unoccupancy
- Multi-tenure
- Underinsurance
- External cladding
- Cavity – panels/insulation
- Other Non-standard construction
- Flooding
- Escape of water
- Title problems
- Listed Buildings/Conservation Areas
Some examples which we have encountered in recent times:
- Virtually brand new block of apartments where it became apparent within weeks of occupancy that the sound insulation was inadequate. Various parties were involved including the architect, developer, NHBC equivalent provider, managing agents and leaseholders.
The tenants will move out for months one by one to have better sound proofing retro-fitted. Potential for much litigation. - Japanese Knotweed – insufficiently dealt with on site and not by a professional. The problem returned halting construction of properties and causing delays and additional costs.
- Title problem not dealt with at the outset and the property owner received a third party claim leading to work being halted (with then associated additional costs) whilst the matter was defended.
- Former mansion split into luxury dwellings and apartments – problems with tree roots and old drains, lead pipework, non-perfect fire separation, timber floors, listed building. This led to very few insurance options, high cost, with little prospect of actually improving the risk features to any great degree.
Solution?
Place greater importance on insurance cover at the outset and engage with a specialist broker and insurers as part of the development team alongside appointed architects, surveyors, QS’s and structural engineers.
Input at this stage may save heartache and cost upon completion.
Feel free to talk to Nviro Insurance & Risk management about your property owners related requirements or issues.
Paul Davies ACII | Tel: 07772640498 | enquiries@titlepolicies.co.uk