MX Commercial case study: Strategic Liability insurance solution for a residential development project

The challenge

MX Commercial faced a significant challenge in securing insurance coverage for a high-end residential development in the Midlands. The project comprised 58 units, and the initial developer had declared bankruptcy, leaving the development incomplete. With a total market value of nearly £21 million, the site had already seen the completion and sale of five units worth over £2 million. These units, now occupied, no longer required insurance coverage.

The main challenge was to find an insurer willing to cover the remaining development, including partially completed properties and future construction works. The project was to be completed in phases, with the most extensive phase valued at £6 million. The original developer, confident in their ability to complete the site, applied to purchase the development and settle outstanding financial obligations. However, the collapse of the initial developer led many insurers to decline coverage, citing the increased risk associated with the project's history.

The specialist solution

MX Commercial collaborated with a specialist broker to develop a bespoke insurance solution tailored to the project's unique needs. The insurance strategy focused on covering the contract works and liability for the entire development, which would be executed over 24 months.

Policy conditions

A critical condition of the insurance policy was the installation of a site-specific fire alarm within 28 days of policy inception. The alarm system needed to include a contact mechanism to alert someone if triggered, ensuring compliance with JCOP legislation. MX Commercial advised consulting a specialist to ensure the alarm system met all requirements, including installing a temporary wireless system with base stations and detectors.

Addressing risk and compliance

Given the heightened risk profile due to the previous developer's bankruptcy, the installation of a temporary fire alarm system was critical. These alarms could be removed and reused on future projects, providing long-term value and risk management. MX Commercial educated the broker on the importance of such systems, emphasising their role in mitigating risks and ensuring project safety.

The outcome

The strategic insurance solution provided by MX Commercial enabled the new developer to proceed with the purchase and completion of the residential development. By addressing the site's specific risks and ensuring compliance with regulatory standards, MX Commercial successfully secured a comprehensive insurance package that protected both the financial and operational aspects of the project.

The bespoke insurance plan not only facilitated the resumption of construction activities but also provided peace of mind to stakeholders. It reinforced the credibility of the new developer, allowing them to focus on delivering a high-quality residential environment. The innovative approach to risk management, including the use of temporary fire alarms, set a precedent for future projects, highlighting the importance of tailored insurance solutions in complex development scenarios.

Ultimately, MX Commercial's expertise and collaboration with specialist partners enabled the successful continuation of the development, safeguarding the project's financial viability and future potential.

Find out more about our Liability solutions or contact the MX Commercial team.