Latent Defects Insurance

This insurance cover is essential for developers, property owners and tenants of residential, commercial and mixed use developments.

Latent Defects Insurance


Latent Defects insurance provides cover for the cost of rectifying or repairing structural damage caused by a fault in the design, construction or materials of a new build, conversion or completed build project that may not be apparent at the time of practical completion.

The best time to effect latent defects is at the start of a construction project and the policy can run for 10 or 12 years if under seal.

Key Advantages of Latent Defect Cover;

  • No need to establish who is at fault or prove negligence
  • Protects against developer/contractor insolvency
  • Allows for easier future sale of the property
  • Cover is freely assignable and can be passed on to future owners
  • No restrictions to the number of assignments
  • Eliminates time delays and legal costs associated with legal proceedings
  • Funds are immediately available for repairs minimising interruption and loss of potential business

Latent Defects Insurance v's Collateral Warranties

Not all parties involved in a new build are included in the collateral warranties and if a defect is found to be the responsibility of a sub contractor or company who has not been included in the warranties there is not a right of recourse against them therefore the defect would need to be repaired at the current owners expense.

If the party who gave the warranties ceased trading, those warranties would become invalid. As collateral warranties are backed by professional indemnity insurance, following insolvency, in general, the policy would lapse and there would be no cover for any potential claim.