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Before Signing the Bottom Line: What Insurance Coverage Do I Need For My New Construction or Substantial Rehabilitation Project?

April 27, 2018

In the ever-changing housing industry, it feels like agencies are constantly starting new construction or planning out substantial rehabilitation projects. Before embarking on these projects, you need to ensure you have properly prepared and that your insurance coverage is in place.

If you are considering starting up this kind of project, there will be documents you will be asked to sign and calls you will need to make. Before you sign those contracts, be sure to review the insurance requirements from both your lender, investor, and any governmental agency financing your project. Once you sign contracts, you may lose the opportunity to streamline those requirements to suit the exact nature of your partnership.

Some standard insurance requests may not make sense for your newly formed private company. A sampling of the more common “requirements” that may apply to your project are below:

Crime Insurance: many lenders will ask you to purchase crime insurance. If your partnership does not employ workers, then crime coverage may not be a good fit.

Hired and non-owned auto liability: This coverage is designed to ensure you with risks that can arise when your employees are driving rental or borrowed vehicles. If you are not an employer, you do not need to purchase hired and non-owned auto liability.

Insuring your Property Managers: Many insurance forms exclude coverage for the acts of property managers. Since lender requirements are written for ‘most’ forms, they would not know that the liability policy you purchase through the Housing Enterprise Insurance Company (HEIC) includes property managers as insureds!

There will be any number of services and products you will need to purchase as you move forward with your project. Don’t waste your dollars buying insurance you do not need or can’t use. Let your HAI Group Account Manager  help you. Send insurance requirements from both your lender and the agency that awarded your project for a review before you sign the bottom line.