Friday, 17 October 2025
In real estate, where projects often involve joint ventures, layered ownership and multiple management entities, the exact wording of “named insured” clauses in insurance policies can be the difference between full protection and a costly coverage gap. While most liability and management-risk policies include broad endorsements, these often fail to reflect the realities of how modern property companies are structured — especially across Europe’s increasingly cross-border investment landscape.
The term “named insured” refers to the specific legal entities listed in a policy’s declarations or endorsements. Only those entities enjoy the full benefits of the policy, including the right to defence, indemnity and claim settlement. If a company involved in a deal or development is not expressly named or captured within the policy definition, it may fall outside the scope of coverage. That limitation is particularly important in real estate, where ownership and management are rarely housed within one corporate body. A project may be financed through a joint venture, held in a special purpose entity (SPE), or managed by a separate asset or fund management company — all of which face potential claims.
Real estate groups often employ joint ventures, trusts and SPEs to manage risk and financing. These structures serve important purposes — limiting liability, isolating assets, or accommodating investors — but they also introduce insurance challenges. When a company holds only a minority stake in a joint venture but retains responsibility for securing insurance, a generic endorsement may only cover its ownership percentage or exclude the JV entirely. Property managers, pension fund advisers or asset managers may have operational control over assets they do not own, yet if the policy only covers entities with 50 percent ownership or greater, those assets could be uninsured for management-related claims. Special purpose entities created for single assets often appear on contracts, leases or financing documents. Even if they are legally dormant, they can still be named in lawsuits, and if they are not listed in the policy schedule, claims may be denied.
Insurers typically underwrite based on declared ownership structures. Where companies operate with multiple parent entities or complex fund hierarchies, the only reliable solution is to map and document every entity connected to the business. Many insurers now support “list-on-file” or “as-owned or controlled” endorsements that allow updates during the policy period, but even these require careful review. According to risk specialists across the European market, a detailed schedule of all project-level entities, general partners and management companies should form part of every renewal discussion. Failure to do so can leave subsidiaries or affiliates without the intended coverage.
When coverage gaps occur, they often surface only after a claim. For example, a real estate company holding an Employment Practices Liability (EPL) policy might exclude entities with no direct employees. If tenants or contractors then sue a property-holding SPE for discrimination or contractual issues, that entity might not be covered. Such scenarios are not uncommon and can result in significant uninsured defence costs.
In 2025, new digital tools are helping insurers and brokers manage this complexity. AI-driven policy management systems and portfolio platforms are increasingly used to track insured entities automatically, flagging missing or newly created companies during the policy term. At the same time, the EU’s Retail Investment Strategy and revised AIFMD II framework have increased cross-border fund activity, creating even more intricate ownership layers in real estate structures. These developments make accurate and adaptable named insured wording more critical than ever.
Industry advisers recommend that policy language be customised to ensure endorsements capture entities that may be managed, controlled or contractually responsible, even without ownership. It is equally important to keep entity lists current and ensure that brokers and underwriters are aware of any new or dissolved project vehicles. Working with brokers experienced in real estate structures helps negotiate the right definitions and coverage extensions, while financial-institution policy forms can sometimes offer broader definitions for complex management or fund environments.
Precise named insured wording is not merely an administrative task — it is a cornerstone of real estate risk management. As ownership and funding models become more intricate across Europe, policies must evolve to match that complexity. For developers, fund managers and investors, reviewing this single clause could prevent major financial and legal exposure later. In a sector built on structure and detail, the fine print in the insurance policy deserves the same attention as the fine print in the lease.
Source: RENOMIA | Gallagher
