About Insurance for Property Developers
Property development can be an exciting and financially rewarding industry – but the risks can be significant.
As a property developer, you need to be across a range of council regulations and manage complex finance arrangements. You may also have to deal with the rising costs of materials and labour, missed deadlines and budget blowouts. Then there’s the chance your builders could become insolvent, weather events could damage your project, or equipment and materials could be stolen or lost. Finally, like all businesses, property developers need to be vigilant in protecting themselves and clients from the growing threat of cybercrime.
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Who should consider it?
All property developers – from those developing a house to those in charge of major retail and factory developments – should take out some kind of insurance.
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➤ in fact
“It's very important for all property developers to do due diligence on the location, property, council requirements and contractors/builders they will be relying on to ensure a successful property development.”
Jo Chivers, CEO, Property Bloom, 2015
Case Study
Karen, a property developer, purchased a residential property to develop into a block of units. Before she transferred $250,000 to pay for the property online, a fraudster sent her false bank account details and her payment ended up in a cyber-criminal’s account. Not only did she lose the payment, but because she had to take legal action to recover the money.
Fortunately, Karen had cyber-insurance, which covered the interest payments she had been charged and her legal costs of retrieving the money. What’s more, because the claims process was handled quickly and effectively, she was able to resolve the matter promptly, helping protect the reputation of her business.
Did you know?
169
Growing
2019
In 2019, 169 construction companies in NSW went into administration or receivership, or were shut down by the courts.
(Nick Sas, Construction companies in NSW collapsing at record rate as building slowdown bites, ABC News, 26 September 2019)
In the September quarter of 2019, the price of electrical equipment rose by 1.3% while other materials rose by 1.8%.
(ABS: 6427.0 Producer Price indexes, Australia, September 2019)
The number of cyber-criminals targeting real estate transactions is growing, according to Dell SecureWorks Counter Threat Unit Research Team
(ZDNet, Australian real estate agents a trending target for cybercrime, May 2018)
What can it cover?
Some property developers take out contract works cover – but often, it’s their builder who takes out the contract works policy. If your builder is responsible for taking out contract works, make sure you are named on the contract as an insured. You should also ensure the policy extends to any sub-contractors working on your property development project. You may also require other types of cover, depending on the type of business you are running.
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Important note
This information is provided to assist you in understanding some terms, implications and common considerations of Business Insurance, it is not complete, so please request full details from your Steadfast insurance broker. You should consider the Product Disclosure Statement (PDS) in deciding whether to buy (or continue to hold) this insurance and also whether this insurance is appropriate for you. The PDS can be obtained from Sky Financial Group. Deductibles, exclusions and limits apply. Business Insurance is issued by various insurers.
Sky Financial Group is an Authorised Representative of Fay Baker 79619240801 - 336757