When developers contact an insurance broker, the first question is often:

“How much will the insurance cost?”

We think that’s the wrong first question.

The better question is:

“What are the biggest financial risks this project actually faces?”

Insurance should be designed around those risks—not around whichever policy has the lowest premium.

For one project, Builders Risk may be the largest concern. For another, it may be construction defects. For another, subcontractor management. For another, completed operations.

The insurance strategy should change accordingly.

A Better Planning Framework

Before discussing premiums, developers should identify:

  • Construction type
  • Project duration
  • Number of subcontractors
  • Lending requirements
  • Public exposure
  • Environmental concerns
  • Contractual obligations
  • Long-term ownership plans

Only after those risks are understood should coverage recommendations be made.

Kavana’s Perspective

Insurance isn’t purchased to satisfy a lender.

It’s purchased to protect the capital invested in the project.

Developers who approach insurance as a risk management exercise generally make better long-term decisions than those who approach it solely as a purchasing exercise.