To protect your investment in any real estate related transaction, you need independent professional advice and authoritative reviews. Our expert Insurance Due Diligence practice brings together experienced transactional risk experts to give you exactly that.

Key aspects of due diligence for corporate acquisitions in the real estate or construction industry include assessing the effectiveness of a target company’s insurance programme, identifying uninsured risks, analysing historical claims to identify any potential liabilities, and reviewing contractual obligations relating to insurance coverage. A thorough review will enable a buyer to make informed decisions, minimise risk, and negotiate terms that provide adequate balance sheet protection.

Due diligence helps lenders by reviewing the borrower’s insurance arrangements to ensure that they comply with the facility agreement. This process identifies any deficiencies in the insurance coverage that could pose risks to the lender. It also provides independent advice on necessary improvements, ensuring the borrower’s insurance policies meet the required standards, ultimately reducing the lender’s exposure to potential financial losses.

Common risks identified during due diligence in the construction space include uninsured risks, inadequate catastrophe coverage and non-compliance with contractual insurance requirements. Companies can address these risks by obtaining bespoke insurance solutions, adjusting existing coverage to meet legal requirements, and ensuring that all relevant risks are adequately covered before proceeding with transactions. Taking a proactive approach here will help mitigate potential financial and legal issues further down the line.

Keeping up to speed with insurance market trends is essential during due diligence because the insurance landscape, especially in a hard market, is constantly changing, with frequent adjustments to policy limits and premiums. Understanding these trends will ultimately allow companies and their advisers to secure better terms, ensure adequate coverage, and avoid unforeseen costs. Engaging with industry experts who have up-to-date market knowledge is crucial for making informed decisions and effectively managing risk in construction investments.