Structural warranty insurance, also called latent defects insurance, is significant for any property development. It builds a solid foundation for property developers, as well as owners and tenants. If damage does occur because of defects in the structure of a new building, structural warranty insurance covers the cost of repairing the damage. This could be poor design, workmanship, materials, installation or, in the worst-case scenario, a full rebuild of the project.

If you’re not sure about this insurance cover, we’ve put together 6 reasons why it is a must-have for your new building projects.

  1. Gives you peace of mind

Structural defects may not be visible immediately after the building project is completed. If there are any problems or defects that occur from materials, design or workmanship, these can appear months or even years after project completion.

This cover gives you 10 or 12 years of protection and peace of mind. If any defects appear in the structure, whether internal or external load-bearing or building finishings such as waterproofing or weatherproofing this insurance will cover the costs of repairing the defects, making any replacements and fixing the damage caused.

  1. Repairs a problem, before it happens

It also covers developing defects that could lead to damage and repairs in the future. It helps solve the problem before it has the chance to get any worse.

  1. No need to prove ‘negligence’

If you have structural warranty insurance in place, it’s quicker and easier to make an insurance claim for a defect. You don’t need to prove negligence from a contractor or place fault at anybody’s feet. You simply need to prove the existence of the defect and proceed with your claim.

This will save you time and money, as well as avoiding costly legal discussions.

  1. Essential to the sales process

Generally, lenders insist on structural cover being in place before they lend money to a buyer. If you’re planning to sell your new building within the first 10 years, taking out this insurance is a definite requirement for a smooth transaction.

structural warranty plan around table
  1. Provides transferable cover

A property which comes with an insurance cover is attractive to buyers. It gives them assurance and peace of mind, knowing that potential future risks to the property structure are covered.

To simplify the whole process, structural insurance is easily transferable. It can simply be passed from one party to the next when a property is sold.

  1. Offers more protection than a Collateral Warranty

Collateral warranty agreements are common between developers and contractors, but they have their limitations. Even with a Collateral warranty in place, you would still be required to prove the contractor is at fault if any defects occur. As mentioned above, having structural cover in place means this isn’t needed, as you simply need to prove that the defect exists.

In addition, contractors could stop trading or go into liquidation. If this transpires and a latent defect appears, any professional indemnity insurance that they may have had in place would also dissolve. Leaving you, as a developer, without a leg to stand on.

Lastly, it could occur that a subcontractor is involved and for some reason, they don’t make it into the Collateral warranty agreement. In the event of this, you’ll find yourself with no real course of action.

Always bear in mind that it’s easier and more cost-effective to take out this insurance at the start. It will be valid from the date of the project completion. However, the longer you leave it to set up, the more it can cost. If done at the end of the project, there will be higher surveyor fees. It pays to make sure each stage of the project is signed off as and when it happens.

If you have any questions or concerns, please don’t hesitate to get in touch with us on 0207 731 3700. Alternatively, you can drop us an email.