Lack of attention to exposures can be costly to developers and homebuilders and impact anticipated profit margins
Whitehouse Station, NJ (Apr. 2, 2019) – In response to the many costly exposures facing homebuilders and developers in today’s housing marketplace, Chubb has issued a new whitepaper, New Home Development: A Start to Finish Overview of Risks in Building Master Planned Communities. The paper examines the many risks that can severely impact the project’s budget and completion, including property damage and destruction, construction material loss, weather-related losses, fire, theft and vandalism.
“Developers and homebuilders have a challenging process to develop raw land into a new home community,” said Deborah Grooms, Senior Vice President, Chubb Major Accounts, Inland Marine. “Therefore, it’s critical that they ensure proper sequencing of construction activity while also securing materials and equipment to avoid costly losses and project delays.”
For example, as discussed in the whitepaper, the biggest risk confronting homebuilders is fire. According to the April 2017 report from the National Fire Protection Association, it estimates that fires associated with construction resulted in $172 million in direct property damage from 2010-2014. In addition, the theft of equipment and materials from construction sites accounts for losses ranging from $300 million to $1 billion, according to the 2016 Equipment Theft Report from the National Equipment Register.
Other pressing risks facing homebuilders include:
- Severe weather, especially in certain areas of the country where excessive rainfall may cause significant damage during the land improvement phase of the project;
- Shortage of labor, specifically with highly-skilled and professional subcontractors; and,
- Storage and debris removal, including the importance of ensuring that all debris, scrap materials, and trash are consistently and safely removed on a coordinated and scheduled basis to avoid fires and trip and fall injuries.
“There are important steps that developers, homebuilders and project managers can take to mitigate their risks in order to successfully develop and build a master planned community—from initial construction through final completion,” said Ray Szczucki, Account Engineer, Chubb Inland Marine. “Homebuilders should consider a systematic approach in which various exposures are identified, assessed, mitigated and insured. Left unattended or given insufficient consideration runs the risk of unanticipated costs affecting the profitability of the project.”
Download the whitepaper here.
Chubb is the world’s largest publicly traded property and casualty insurance company. With operations in 54 countries and territories, Chubb provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients. As an underwriting company, we assess, assume and manage risk with insight and discipline. We service and pay our claims fairly and promptly. The company is also defined by its extensive product and service offerings, broad distribution capabilities, exceptional financial strength and local operations globally. Parent company Chubb Limited is listed on the New York Stock Exchange (NYSE: CB) and is a component of the S&P 500 index. Chubb maintains executive offices in Zurich, New York, London and other locations, and employs approximately 31,000 people worldwide Additional information can be found at chubb.com.
Chubb Insurance Company of Canada has offices in Toronto, Calgary, Montreal and Vancouver and provides its products and services through licensed insurance brokers across Canada. For additional information, visit: chubb.com/ca.