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Latent defects insurance

Need latent defects insurance? Let us help build the right solution for you

If you’re a developer, property owner, receiver, or contractor, you’re probably considering latent defects insurance to help:

  • Fill gaps in your standard property insurance policy
    A property “all risks” policy on a completed building does not provide protection for damage arising out of an inherent or latent defect in the building.
  • Provide cover in the event of an inherent defect in the design, workmanship, or materials
    With a cover that does not rely on proof of fault or negligence, just proof of defect that could become apparent in the structure or waterproofing envelope of a building resulting in physical loss or damage.
  • Protect yourself in the event of a claim (for negligence) against the contractor or professional advisors
    Who may not have adequate professional indemnity cover, or may no longer be trading, rendering any warranties worthless.

Builders of Great Britain, we're ready to buckle down and get to work with you

By taking out a latent defects insurance policy and engaging with the right broker to get competitive cover, you can spend more time on what matters most. What are you looking for in your insurance partner?

Big enough to keep you safe. As part of Marsh & McLennan Companies, we’re a family with over 35,000 colleagues operating in more than 130 countries.

Small enough to care. A proud UK community broker with a local branch network the length of the country. Join a family of over 19,000 construction clients who have been supported by our 25+ years' involvement in the construction insurance industry.

If you need us on site at 7am, we’ll meet you there. 

What does a latent defects insurance policy cover?

  • Structural defects
  • Ingress of water (excluded for the first 12 months)
  • Threat of imminent collapse requiring remedial works to prevent damage caused by a defect in design, materials or workmanship

In the event of a structural claim, additional areas of construction insurance cover can include:

  • The costs of demolition to allow rebuilding
  • The cost of providing alternative accommodation during the period of the reconstruction or repair.
  • Loss of rent/loss of gross profit or revenue/increased cost of working from alternative premises 
  • Damage to mechanical and electrical services
  • Mechanical and/or component failure

The policy is generally available for a period of 10 to 12 years from the date of issue of final certificate of practical completion and is assignable to future owners/tenants/funders. Speak to an expert today to discuss further.

The who, what and why of latent defects insurance

The need to protect a construction project doesn't end when the building is completed. There are many reasons why as the owner or developer of a building you might still need to consider having the development insured after completion. 

Latent defect claims examples

Water penetration
following badly fitted windows, failure of the rain screen or of basement tanking, defective roofing, defective cladding.

Subsidence
landslip or heave causing damage to the walls.

Defectively designed
floor slabs causing damage to floors and walls.

Omission of wind posts
causing damage to floors.

Latent defects insurance frequently asked questions

Q
What is latent defects insurance?
A
An indemnity insurance product that covers the physical damage to the property caused by defective design, materials, workmanship, construction or site preparation, undiscovered at the date of practical completion
Q
Why do I need latent defects insurance?
A
When other parties such as your contractors or professional advisers may not have adequate professional indemnity cover, or may no longer be trading, your warranties can be rendered worthless. Latent defects insurance fills this gap in standard property insurance policies, by covering the physical damage to the property, undiscovered at the date of practical completion.
Q
What is the process of obtaining latent defects insurance?
A
1. Submit technical information and receive latent defects insurance quotation.

2. Accept quotation, pay deposit premium and inspection fee.

3. Technical audits begin. This will flag potential defects to the client and insurer during the construction process. If these are not adequately resolved before practical completion, it will be flagged in the technical audit sign-off to insurers who may then consider altering their initial quotation.

4. Periodic visits to site coinciding with important milestones in the construction programme.

5. Practical completion and sign-off by technical auditor. As part of the sign-off process, you’ll be expected to provide:

a. Practical completion certificate.
b. Snagging list.
c. Reinstatement valuation to ensure the correct value is being covered.

6.
Sign off by insurers, policy issued and balance premium paid.
Q
Do I need to purchase cover prior to completion on a partially completed structure?
A
Although we recommend purchasing cover prior to the commencement of the construction project, some insurers are willing to provide cover on partially completed and/or completed structures. However, premiums will be higher.
Q
Am I covered for latent defects insurance under my contract works insurance policy?
A
During the construction phase of a building, loss or damage is normally insured under an “all risks” contract works insurance policy. Following completion of construction, a property “all risks” policy is usually arranged; however, this policy does not provide protection for damage arising out of an inherent or latent defect in the building.
Q
Can a latent defects insurance policy be extended in any way?
A
Latent defect policies provide cover for defects in design, workmanship, or materials. Policies can be extended to provide cover for mechanical and electrical defects, business interruption, and, if required, new home warranties to residential owners.
Q
Who purchases latent defects insurance?
A

Developers, Property owners, Receivers, and Contractors typically purchase this insurance.

Q
What type of developments is latent defects insurance available for?
A

Latent defects insurance is available for commercial, residential, and mixed-use developments.

Q
What if the contractors/professional team I use are no longer trading when I come to claim, am I still covered?
A
Yes. This cover provides insurance protection to repair/replace damaged property even if the contractors and/or professional team are no longer trading.