Latent Defects Insurance
Close-up of the Walbrook building

Latent Defects Insurance

On new build properties and conversions, structural defects can appear months or years after completion due to poor design, workmanship or materials. Whether you’re a developer, financier, owner or occupier, the impact on you can be severe.

Latent Defects Insurance

Latent defects insurance can help to cover the cost of repairs or rebuilding if structural damage appears months or years after the practical completion a new-build or conversion project. Latent defects may be caused by a fault in the building’s design or construction, or by faulty materials.

This type of damage can be hugely disruptive, costly and complicated, and could have a serious impact on your business. That’s why it makes good commercial sense to mitigate the risk with building defects insurance – it can be essential for property developers, funders, and owners or tenants.

The security provided by a latent defects policy can encourage investors and can accelerate sales and lettings, and could help to make the future sale of the property easier.

What kind of projects can be insured?

We can arrange latent defects insurance for inherent or structural issues for a wide range of residential, commercial and mixed-use developments. You can be covered for speculative, non-speculative and completed projects. Coverholders can range from individuals doing a self-build to large-scale national developers.

Key advantages of latent defect insurance

Latent defect insurance means there's no need to establish who’s at fault or to prove negligence - and no need for slow, complex litigation before repairs can be done. There are no restrictions on the number of assignments (passing on to future owners), and immediate access to repair funds can minimise business interruption.

Latent defects insurance – highlights

  • Competitive rates thanks to our strong relationships with insurers
  • No need to wait 2 years – we place Day One cover
  • Speculative, in-progress and completed builds can be insured
  • Cover for structure plus the waterproofing envelope
  • Policies can run for 10 years or 12 years
  • Policy wordings can be tailored to meet developers’ and funders’ needs
  • Cover for projects ranging in value from £100,000 to £100 million
  • Cover selected from a broad panel of rated insurers
  • Can include loss of rent.

Policy limits and exclusions may apply, please contact us for full terms and conditions.

Latent defects insurance provides a cost effective, high-performance alternative to collateral warranties, although they often work hand-in-hand. Collateral warranties can only be actioned if the professional indemnity policy (to which they are usually appended) is still in place and all parties are still trading. You’d also need to prove negligence on the part of the construction team, which can be very difficult. However, structural defects insurance covers you even if parties cease trading, and there’s no need to prove negligence.