Agreements for lease with development obligations—insuring the developer’s works
Agreements for lease with development obligations—insuring the developer’s works

The following Property guidance note provides comprehensive and up to date legal information covering:

  • Agreements for lease with development obligations—insuring the developer’s works
  • Insuring the developer’s works
  • Early access
  • Latent or inherent defects
  • Latent defects (decennial) insurance

Insuring the developer’s works

As between the developer and the tenant, the developer should covenant:

  1. to ensure that the developer’s works are insured against usual risks for the full reinstatement value of the works together with all proper professional fees incurred in connection with reinstatement, and also the costs of building demolition and site clearance: that cover must endure until practical completion is achieved

  2. to use the insurance monies to reinstate any developer’s works that are damaged or destroyed; if those monies are insufficient to meet the full cost of reinstatement, the tenant will expect the developer to make good any shortfall out of its own pocket

For the developer, it is important that, so far as possible, the developer’s insurance obligations should be limited to the matters which are covered by the contractor’s all risks (CAR) policy which will be required under the building contract, and which may be taken out by either the developer (as employer) or the building contractor, although the latter more usually does so because it carries such cover in the ordinary course of its business. If the building contractor takes out the policy, the developer will want to be a joint insured under it.

The CAR policy will typically cover:

  1. the site

  2. the building works whilst they are in progress

  3. unfixed goods and materials on