Real estate developers have no shortage of to-dos at the outset of every project. From lining up funding and the potential litany of contractors to nurturing key relationships in the community, it can be hard to prioritize tasks.  However, establishing the proper insurance program is critical and must be an area of focus among the flurry of activity.

“It’s essential to have a trusted and experienced team of accountants, lawyers and insurance folks looking after your best interests,” said Rich Savino, PCF Construction Practice Leader and principal of Broadfield Group, a PCF Insurance company. “Without the right team in place, the project is in danger before the first shovel is in the ground.”

Build proper insurance costs into project budget

Ensuring the proper insurance coverage begins with accurately accounting for it within the project budget. Determining that amount should be a decision made after your licensed insurance agent puts together an appropriate program for you.

“Inappropriate estimates can carelessly be inserted into a line item and create havoc down the road,” said Savino. “Collaborating with a law firm that specializes in the construction space and is familiar with local and state laws will allow real estate developers to create proper risk transfers.”

Savino advises partnering with your legal team to establish minimum insurance threshold requirements as well. Your insurance team should be responsible for determining the best policy structure and insurance coverage based on your unique project needs.

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Obtaining the right insurance

Construction insurance is typically implemented through project-specific policies or partially self-funded captive programs that provide coverage for multiple projects during a defined timeframe. Optional wrap-up insurance, sometimes referred to as an owner-controlled program, offers the ability to cover multiple parties working on the same project.

Categories of insurance to consider include:

  • Statutory policies
  • General liability
  • Excess liability
  • Builders’ risk
  • Commercial auto
  • Cyber

In addition, third-party warranty insurance is recommended for all residential projects. It is a valuable tool to thwart illegitimate habitability claims and quickly resolve justifiable ones.

Throughout the bidding and vetting process, it’s imperative to ensure all insurance requirements can be met.

“Price is always going to be an important consideration, but it can’t be a substitute for the proper insurance requirements,” said Savino. “That’s why it is so important to select a broker that has a deep knowledge base in construction insurance."

Trust the experts

Like other aspects of your construction project, the key to securing the proper insurance is assembling a collaborative and experienced team of experts.

“I refer to it as the three-legged stool,” said Savino. “Your accounting, legal and insurance advisors should lend their individual expertise while working together to maximize the profitability of the project.”

PCF Construction

Who is PCF Construction?

As a top 20 U.S. insurance broker, PCF Construction designs its insurance and risk management solutions to protect general contractors, real estate developers, artisan contractors and others within the construction sector. Well-versed in risk mitigation and loss control, PCF Construction helps set construction projects in motion, covered and in control. Learn more at