Residential and commercial real estate development are flourishing as many projects continue to commence in the Greater New York City Area.
Other than General Liability, there are various exposures associated with real estate development.
Here are 3 things a developer doing business in NY should consider when buying real estate developer insurance:
3 Thing You Need To Know About Real Estate Developer Insurance:
1. New York Labor Law Could Be Your Worst Nightmare
The NYLL §§ 240 (the “Scaffold Law”) and 241 ( the “Safe Place to Work Law”) impose strict liability upon developers, contractors, and property owners for all “gravity-related” and unsafe place injuries. An average Labor Law claim costs approximately $2.5M — yikes! Developers are responsible for worker safety on their sites, so always make sure you’re practicing the most effective safety measures. In addition to increasing safety, developers should also practice contractual risk transfer to avoid huge losses due to on-site injuries.
2. Professional Liability Exposures Exist
Real estate projects can be lengthy and costly with many directors, officers, and investors getting involved. These are people that are at risk of some type of professional liability claim throughout the duration of the project. Professional Liability can cover your firm for “wrongful acts” committed in the course of development including:
- Preparation and transmittal of design and construction bids
- Permit, variance, consent, and easement processes
- Management and supervision of design and construction
- Interactions with agents, title companies, and property managers
3. Environmental Insurance is Becoming a Necessity
Environmental insurance coverage is often overlooked by developers and contractors. As of recently, NJ has been cracking down on pollution liability bringing rise to many class action suits related to pollution, and NY will most likely follow.
A pollution liability claim could be extremely costly, but an insurance policy could cover you for:
- Clean up
- Legal costs
- Errors
- Property Transfer
Contamination can happen at even the smallest of sites, so consider purchasing environmental coverage to avoid paying out large settlements.
Real Estate Developer Insurance Conclusion
Real estate developers should cautiously analyze their potential risks and insurance coverage, which requires more than a basic General Liability policy. Urban development has become increasingly costly due to recently imposed laws and regulations, so it is imperative to practice good risk management. If you have questions about how to properly protect your Real Estate Development firm, call me today.
Opinions expressed in this article are solely the author’s opinion, not intended to provide the reader with legal or any other professional advice. Should you need advice or opinion, consult with a qualified professional to address your specific needs.