It is often the case that building works defects may not become evident until after completion of the project and then well after completion of the defects liability period. These faults are known as latent defects. Latent defect insurance provides cover for damage as a result of defective design, workmanship or materials, not discovered before practical completion. The policy period is usually 10 years and can be extended to include; Loss of Rent, Component cover and Mechanical & Engineering damage.
It is becoming very popular with developers and investors as it provides cover for the owner of a new building should their investment suffer from damage caused by a defect in design workmanship or materials. The client has the comfort that there is a first party insurance policy in place to correct that defect.
The cover can be put in place by the developer, contractor, owner, investor or tenant and is fully assignable to all future owners, funders or tenants.
Benefits of cover for commercial and mixed use developments
- First party insurance
- No delays over remedial works or establishing blame
- No doubt over liability
- No doubt over the ability to pay (insured by A rated underwriters)
- Avoid delays in settlement
- Meets tenant / owner requirements under full repairing lease
- Meets funder requirements
- Allows you to free up capital
- Includes contractor insolvency
- Makes re-sale more attractive
- Helps attract tenants as they are protected
- Means less exposure to warranty or PI claims
- Covers the building (it’s not a warranty on the work)
The main advantage for the developer is that it provides a single point through which to recover the costs of repairs following discovery of a latent defect. The policy offers a simple alternative to relying on the contractual warranties.
The cost range is between 0.5% – 1% of the sum insured dependant on the type of project, experience of the contractor and financial strength of the developer / investor.
We are an independent organisation authorised and regulated by The Financial Conduct Authority offering advice and market quotes for the UK Building warranty market.
We also provide independent monitoring solutions from professionally qualified building surveyors.
Our Team has in excess of 20 years’ experience in the UK property sector including Insurance and surveying services.Our ethos is based around outstanding customer service.
Please call us on 0203 7021 0422 if you would like to discuss any of our services further.