Developer insurance: guide and advice

In the field of financing and construction of a building, the developer plays a very important role. The subscription to a decennial insurance is crucial in order to cover its responsibility towards future customers. Other guarantees for developers are also compulsory. To find the perfect decennial insurance, the promoter must follow a few tips. Certain verifications are also essential during the contract.

The promoters and its functions

Specialized in the construction sector, the promoter is the person who acts as a “Constructeur Non Réalisateur” (CNR). In general, he acquires land or buildings on which he carries out works (construction or renovation) with the aim of selling them.

By developing himself the real estate projects of construction, the promoter intervenes at each stage, but solicits the support of subcontracted professionals for the preliminary studies, the design and the realization. He will have to go to a technical studies office, an architect’s office or a craftsman of any kind according to the progress of his project.

Nevertheless, the latter is obliged to take care of the numerous administrative steps that are indispensable in order to implement his real estate program. Thus, the promoter is both the person in charge of obtaining the authorizations (for example building permits) and of selecting the various subcontractors.

In addition, the developer will seek to identify sources of financing for the project. In fact, he solicits financing from financial institutions in the form of credits. This approach allows him to promote the project to the general public and to market his real estate programs. Guarantees are therefore essential for the proper functioning of the project.

The ten-year warranty and the Damage to the building (DO)

For the real estate developer, the ten-year warranty becomes essential since it protects his client for a period of 10 years in case of defects or damages related to the construction. The professional must indicate precisely the information related to this insurance on his estimates and invoices. When selling an apartment, the ten-year warranty certificate should be attached to the sale contract.

Because of the numerous missions carried out by the real estate developer, the latter acts in particular as a project manager. As a result, the 1978 Spinetta law obliges the developer to take out DO insurance. This last one comes in complement of the guarantee of decennial responsibility of the builders. In fact, this guarantee allows a fast payment of the sums due by the builder. Offered by the damage work, it is activated within the framework of the decennial responsibility. Moreover, this last one guarantees the payment of a compensation. This last one applies as from the moment when a damage compromises the solidity of the work and makes it unusable or uninhabitable, even partially. For this reason, the OD only comes into play when damage falling under the decennial liability occurs. That is to say that only the realization of the works involving a part of the shell is concerned.

Mandatory insurance for the developer

There are a large number of insurance policies for professionals. In order to protect both buyers, developers and third parties, damage guarantees (bodily, immaterial or material) represent obligations in the eyes of the law.

The first compulsory insurance remains in particular the DO. It guarantees the compensation of the owners in the case of damages falling under the decennial guarantee. Specifically, the damage work offers the possibility to guarantee the payment of a compensation. The latter can indeed cover the cost of repairing damage likely to affect the solidity of the work.

In addition to this insurance, the developer must take out a Builders’ Risk Insurance (CNR). This decennial coverage concerns the operators. He also solicits the help of companies having this guarantee. The insurance CNR remedies the possible insufficiencies of the guarantee of builder. Indeed, it is presented as a complementary insurance coming into play in case of deficiency of the decennial guarantee builder.

Last but not least, it concerns the Civil Responsibility insurance

Professional (RCP). This time, the contract covers the financial consequences of the prejudices caused to the thirds. These damages can be physical, material or immaterial. Moreover, the PII insurance can also cover the damages caused by professional faults as well as by accidental events during the course of the construction.

Finding the best ten-year insurance for developers: tips

The corresponding ten-year guarantee must be concluded before the beginning of the work. It is valid for 10 years from the date of acceptance of the work. The total cost varies according to several criteria: the size of the company, the amount of turnover and the nature of the main activity carried out.n That’s not all, insurers also consider the years of experience, the level of skills, the processes implemented as well as the extent of the guarantees desired.

Finding the most advantageous ten-year insurance for real estate developers begins with a comparison of offers using an online tool. By filling out a simple form designed to determine your profile and needs, you will then get detailed, customized quotes. If you have difficulty finding the best ten-year guarantee, the best option is to contact an insurer specialized in the sector. As a last resort, it is advisable to contact the Central Tariff Office (CTO), which will oblige the insurance company of its choice to provide affordable coverage. So don’t hesitate to start looking as soon as possible.

Risks of not being insured and the necessary checks

In the case of a lack of construction damage insurance, the compensation time would be very long. In addition, if the property is sold within ten years (after the construction), the owner will be considered solely responsible for the consequences of the lack of insurance to the new owner. In case of a construction without ten-year insurance, the company may run a great financial risk for compensation to the owner or developer and may even be punished with a prison sentence. Apart from that, it is necessary to consider making some verifications. First of all, before collaborating with a promoter for the construction or renovation of a house, it is necessary to verify if he is correctly insured. Indeed, you will have to ask for concrete proof in order to avoid possible problems in the future. Before subscribing, check that the selected contract is adapted to the specificities of the company and the building sites. In addition, an audit of the contracts should be carried out at the time of closing.

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