For any property developer, the early stages of a project are defined by high stakes and heavy commitments. The moment you prepare to borrow funds to acquire land or a building, every assumption matters. Developers rely on the assurances provided by professional partners — including insurers — to give comfort that the numbers will stack up. But that comfort can be built on uncertain ground.
A recurring scenario is familiar to many of our clients: a developer requests a quote for structural warranty cover and receives a document labelled a “Letter of Intent” (LOI). At first glance, it looks like security. It includes a cost, and sometimes even feels like a commitment. Yet in reality, many LOIs are non-binding, carrying none of the contractual certainty required to underpin a funding application or, crucially, the long-term protection of the development.
The risk here is twofold. First, developers may rely on a non-binding LOI to unlock funding and draw down finance, purchasing their site without a firm insurance contract in place. Second, some insurers offer attractively cheap quotes at this stage, only for the details to shift once construction is underway — or worse, for cover to be withdrawn altogether if conditions are not strictly adhered to. The illusion of certainty can prove more dangerous than no quote at all.
At LBB, we believe contract certainty is not optional but essential. By partnering with a specialist consultant, you can be safe in the knowledge that once a quote has been accepted, the terms are binding, the costs are fixed, and the scope of cover is clear. It removes ambiguity for lenders, provides confidence to developers, and reduces the risk of costly disputes or policy failures later down the line.
Unfortunately, some parts of the market work differently. We have seen insurers retroactively shape policies around circumstances, sometimes with clauses that do not match the realities of the build. This can lead to unsuitable protection — or even a complete collapse of the insurance arrangement. In either case, the developer is left exposed at precisely the point they need security most.
That is why we work directly with developers to ensure the right price and the right contract are secured at the right time. Contract certainty is not just a box-ticking exercise at the point of purchase; it must be maintained throughout the entire construction process. We safeguard our clients against the false economy of cheap quotes and non-binding LOIs, ensuring the cover they rely on is not conditional in ways that could unravel their project.
In property development, risk is unavoidable — but uncertainty is not. With the right advice and the right protections in place, developers can proceed with confidence that the insurance they are paying for is as secure as the buildings they set out to create.
Summary of potential contract uncertainty consequences
✔️ Funding Delays or Withdrawals: Lenders typically require binding structural warranty documentation before releasing funds. If only a non-binding LOI exists, a bank may delay drawdown or later discover the cover is invalid, leaving the developer short of cash mid-project.
✔️ Increased Costs Mid-Project: A provisional or conditional quote may rise once construction begins, particularly if the insurer reassesses risk. The developer, already committed, has little choice but to accept inflated premiums.
✔️ Policy Withdrawal: If conditions within the LOI are not strictly met (e.g. contractor credentials, site inspections, or materials specifications), the insurer may withdraw cover partway through, forcing the developer to source last-minute alternatives — often at a higher cost.
✔️ Unsuitable Cover: Without firm terms, insurers may retroactively shape a policy that excludes key elements (e.g. basements, non-standard construction, or M&E systems), leaving gaps in protection that lenders or future buyers will not accept.
✔️ Resale Issues: If the warranty is incomplete or disputed, the property may not meet the requirements of buyers or mortgage lenders, delaying sales and reducing marketability.
✔️ Legal Disputes: Ambiguities over what was promised versus what is contracted can escalate into costly disputes with insurers or warranty providers.
