Without knowing the full story and/or your situation it's hard to say, but there are certainly some concerns.
I know you must be thinking "I already own the 25 adjacent acres and if I don't buy it, somebody else will, and they will enjoy it for years....life is short...it's probably now or never...and I will probably be kicking myself".
It appears from the limited pictures the surrounding area is in the process of long term development which can be good and bad. The good is your property would probably be a very good investment, the bad is that it could be a trespassing and liability nightmare. I guess it depends on your situation, your goals, and level of "baby-sitting" you are willing to do going forward.
Besides speaking with an attorney friend, I would also speak with a very experienced insurance friend and be totally frank "face to face"....nothing via e-mail at first. Explain the situation...good and bad....and ask the insurance expert what are their thoughts, advice, and the parameters of low cost and high cost of umbrella policies that would help cover potential risks. Insurance as we all know can vary greatly in costs. Insurance involves gamble. The less risk for you the more the cost. You will have to decide how much you are willing to pay to lessen that gamble.
I would think your dam risks could probably be minimized if you are willing to pay for and work with an expert in lake building and create extra measures of safety like extra emergency drains that could be opened if a dangerous situation arose. Fully inform the expert lake builder you want to go over-board on dam measures that would protect the housing community from dam failure/flooding. Document and preserve all measures (pictures, notes, paid invoices) that address dam safety measures that an attorney in the futures could examine and see if it would help you during litigation.
If you can get a certain level of confidence that your dam is really solid and has something like new backup emergency releases that would greatly minimize catastrophic failure...then your liability may shift to trespassers or guests who could be injured, killed, or drown. That kind of umbrella might not be nearly as expensive. Of course you will need to place proper "No Trespassing" signs and take pictures of those in place. Just looking at the pictures I would think trespassing could be an on-going issue.
Beautiful lake. I can see why it has your interest. The trees on the dam....do they also serve as great "privacy wall" between you and the houses? Also looking down the road are you the owner of much of the vacant pasture land around the lake? Or is that additional potential development "problems" down the road of trespassing and liability. Does the housing community around your property have an HOA?
