Developers have need of insurance regardless of whether they intend to retain property ownership interest wholly, partially or temporarily. They can have ultimate legal responsibility for the quality and safety of the constructed (or purchased) property being on-sold, including contamination of land pre and post construction. There are also professional liability exposures unique to developers when acting as consultants to investors/owners.
The way people live, work, play, and interact has altered dramatically due to the COVID-19 pandemic, and may continue to change. To position themselves for success, real estate owners, operators, managers, and developers will need to adapt to and focus on the long-term implications of these shifts, including evolving climate change and technology risks.
Whether your business is facing new environmental liabilities, grappling with more demanding lender requirements, or evaluating alternatives in risk financing, you can benefit from advice and guidance from risk management advisors with an in-depth understanding of your industry.
Real estate companies should find ways to become more resilient to future risks. Marsh's specialists put their expertise to work in helping find appropriate approaches to specific industry challenges wherever they are faced.
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FAQ's
Certain risks faced by those operating in the real estate sector are, to varying degrees, ever-present all over the world: These include variances in value tied to unpredictable macroeconomic conditions, natural disasters, human-caused catastrophes, and sudden or gradual property damage.
Others, like sociopolitical unrest, terrorism, and economic instability, are more common in certain markets than others, including various countries in the Asia, Pacific, Middle East, and South America regions.
Some areas of market risk pertain to precise verticals of real estate, rather than regions. For example, the risks of entering the commercial office space leasing market given burgeoning work-from-home trends differ from the risks of third-party logistics space, where demand is currently quite large. Investors should be discerning in their consideration of risk.
For properties owned or intended to be purchased, we generally recommend protection that goes beyond the basic standards (e.g., provisions for fires, hailstorms, tornadoes, wind damage, vandalism, and theft of non-cash business assets) and accounts for extraordinary circumstances:
- Extreme weather events (e.g., flooding, earthquakes, hurricanes, and landslides/mudflow)
- Cyber Liability
- Loss of rental income
- Terrorism
- Financial crime
- Political risk
Along similar lines, a general liability policy, broad as it can be, may not be enough to fully protect property interests. Excess liability provisions that should be considered include:
- Directors and officers
- Errors and omissions
- Environmental damage
- Injury (to you and your employees)
Risk is unavoidable in the real estate market. While most developers or investors in residential or commercial property are generally aware of risk, it's easy to lose sight of specific risks and subsequently be caught off-guard — and without a critical contingency plan or safety net — when the unexpected actually happens.
Working with the experts at Marsh will help prepare you more effectively for both expected and extraordinary hazards. Our real estate team draws on extensive experience and a truly global perspective, and we're ready to help you find a streamlined and tailored risk management solution.