Building Warranties Insurance

A latent defect policy otherwise known as building warranty or structural warranty insurance, is cover for the cost of rectifying or repairing structural damage to a building, caused by a fault in the design, faulty construction or imperfect materials. This applies to problems with a new build, a conversion or a completed build, that may not be apparent at the time of completion. The insurance will cover you from 8 to 12 years. The type of damage covered includes: damage caused by structural defects and ingress of water; remedial work to prevent threat of collapse; costs of dismantling, moving, storing and re-erecting property; as well as all professional fees. In addition, our polices can also include cover for component failure, which will protect you from the premature failure of nonstructural component parts such as: boilers, wiring, pipe work, and even kitchen units.

Why do you need Latent Defects Insurance / Building Warranty Insurance or Structural Warranty Insurance?

Apart from making sure your build is protected for every eventuality there are several other reasons that make latent defect or building warranty cover a necessity.

It’s worth noting that nearly all mortgage lenders will require a Latent Defects policy or building on any property under ten years old. This means that, without a building warranty, you will not be able to sell your property. Even if it was possible to sell a property without a building warranty, the legal fees and the time needed would far outweigh the cost and time of obtaining cover.

Additionally, if you have a rental portfolio and are looking to let your new build long term, you may need to refinance. In which case, you would also need a building warranty. And, while many developers may look at a building warranty as an unnecessary complication, if you are planning on living in your property it can actually save you money. This is because, not only does it protect in the ways mentioned above, but it will allow you avoid paying the Community Infrastructure Levy (CIL). This is a tax put in place by the planning act 2008 and came into force in 2010. It stipulates that new developments that create net additional floor space of 100 square metres or more, or creates a new dwelling, are potentially liable for the levy. The charge will be applied per square metre of new development and varies according to the development’s scale, use and location. This charge can easily equate to over £50,000. When you consider that the policy premium is less than half of that and will protect you from paying CIL, it makes economic sense.

How else does this insurance help you?

As you know, any type of construction project or property development can be extremely complex. Once the complicated and time-consuming planning stage is complete, you then have to bring all the physical aspects of the build together. You have to specify, source and supply building materials, from pilings, to bricks, to glass. You have to contract, schedule and coordinate Trades to carry out joinery, electrics, plastering and plumbing, without getting in each other’s way. You have to oversee the project to make sure the plans are followed and everything happens the way it should and at the right time. And all this usually has to be done to a specified budget and to an immovable deadline. Hopefully, at the end of all of this, you have a completed construction and a satisfied client. But what if problems become apparent after the build is complete and signed off? What if floors or walls shift due to unforeseen ground movement or faulty materials? What if a major problem develops with any load-bearing elements, threatening the integrity of the build? Even though all of these things may be outside of your control, your client could still hold you responsible and take legal action against you. And the resulting costs could cause you major financial difficulty and threaten your hard-won reputation. Which is why you need a Latent Defect Insurance or Building Warranty to protect you from such an eventuality. At Construction Insure, we’ve been brokering insurance to protect property developers and contractors like you for forty years, so you can trust us to get you the cover you need.