fbpx

To Find Out More, Call 1300 729 550

Insurance For Property Developers

The risk and return paradigm is well understood by many investors – if you want a higher level of return you need to accept a higher level of risk, and vice versa.

So with the high potential returns on offer from property development, it should come as no surprise the risks can also be significant. However, unlike certain other investment strategies, there are several steps that can (and should) be taken to mitigate risks in property development.

In this article, we will discuss just one of those steps – insurance.

Insurance requirements will vary depending on the type of project, the scale of the project, and the extent to which the developer is involved in construction, but for the sake of the exercise let’s assume a developer is performing a small residential project where a builder is engaged on contract to construct the project.

In this situation, a developer will typically acquire a site with an existing dwelling on it that may be tenanted whilst the development permit and building permits are secured. During this phase of the project a comprehensive landlord insurance policy will generally be sufficient, assuming it incorporates public liability insurance which most do.

Once the tenant vacates, the landlord insurance policy will typically be canceled, at which point it’s generally advisable to establish a public liability policy. Whilst the builder will generally hold their own public liability policy, holding a separate policy will provide coverage for periods where the builder’s policy doesn’t apply (e.g. pre-construction and post-construction).

Assuming the developer engages a builder on contract, the builder will be required to hold their own insurances which typically include contract works insurance, home warranty insurance, public liability insurance (as discussed), product liability insurance, and workers compensation insurance.

Once construction is completed, and handover has been achieved, it’s critical the developer insures the works from the date of handover as the builder’s insurances will typically be canceled at that point.

Where projects with community title schemes are concerned, the body corporate or owner’s corporation manager should assist in arranging the insurances from handover. Finally, an area of insurance that isn’t often discussed amidst the property development insurance conversation is the area of personal insurance. The management and financing of a property development project is often predicated on the continued good health and income-earning capacity of the developer.

But what if the developer suffers an illness or injury mid-project that leaves them unable to earn an income or manage the project? What implications would that have for the project, the developer, and the developer’s family?

A strong case can be made for anybody with financial commitments to hold personal insurance, and that’s particularly the case for property developers. The key personal insurances to consider include income protection insurance (ideally agreed value with a short waiting period and long benefit period), life insurance, total & permanent disablement insurance, and trauma insurance.

Holding adequate insurance can go a long way to de-risking a property development project, and when combined with a number of other risk mitigation strategies the risk/reward paradigm can begin leaning ever so slightly in the developer’s favor.

To chat further with us about Property Development and the courses we offer, click here: https://www.propertymastermind.com.au/schedule-an-appointment/

Insurance For Property Developers

But what if the developer suffers an illness or injury mid-project that leaves them unable to earn an income or manage the project? What implications would that have for the project, the developer, and the developer’s family?


Warning: Illegal string offset 'title' in /home/proper39/public_html/nov/wp-content/themes/novel/single-post.php on line 55

Notice: Uninitialized string offset: 0 in /home/proper39/public_html/nov/wp-content/themes/novel/single-post.php on line 55
Kind Words From Our Students
See Jeremy 
See Jeremy 

"Thanks Bob. You're the best in this business!"

Thanks Bob. You’re the best in this business! You have the track record. God certainty is please with you for helping those who has dreams! Your legacy will stay forever!

Trish Hawkins
Trish Hawkins

"I am happy with the course and am more confident when dealing with professionals."

I am happy with the course and am more confident when dealing with professionals. That is a huge advantage for me as a woman so am getting a lot more out of the course than just the obvious. 

M. Rigoni
M. Rigoni

"You can trust these guys"

You can trust these guys, they are professional, reliable, honest, knowledgeable, problem-solvers; who build a diversified range of quality products that deliver great returns.

 

AS SEEN IN

You May Also Like...

What Is the Ideal Profit Margin in Property Development?

What Is the Ideal Profit Margin in Property Development?

LISTEN TO EPISODE
Property Development Masterclass – 2024

Property Development Masterclass – 2024

LISTEN TO EPISODE
Short Seminar: Property Development

Short Seminar: Property Development

LISTEN TO EPISODE
Property Investing – Armchair Developer Strategies

Property Investing – Armchair Developer Strategies

LISTEN TO EPISODE

Ready to Learn More About Property Development?

BE MENTORED BY US
PMM iMac