If you’re a property developer, you’ll surely have heard of ‘Structural Warranty Insurance’. When it comes to property development, it’s something you definitely should not forget.
It’s an essential tick to make on your project ‘to-do’ list.
Also called Latent Defects Insurance, Structural Warranty Insurance gives protection and peace of mind to property developers (as well as owners & tenants). If damage does occur because of defects in the structure of a new building (whether that’s from poor design, workmanship, materials or installation), Structural Warranty Insurance covers the costs of repairing the damage or in the worst-case scenario, a full re-build of the project.
Here are 6 rock-solid reasons why you should ALWAYS remember to take out Structural Warranty Insurance for your new build projects:
1) Brings you peace of mind
The thing about structural defects is that they are not visible straight away or 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.
Structural Warranty Insurance gives you 10 or 12 years protection and peace of mind. If any defects appear in the structure (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.
2) Repairs a problem, before it happens
Not only do you have peace of mind knowing that damage is covered after it happens, but Structural Warranty Insurance also covers for developing defects that could lead to damage and repairs in the future. It solves the problem before it has the chance to get any worse.
3) No need to prove ‘negligence’
If you have Structural Warranty Insurance in place, it is quicker and easier to make an insurance claim for a defect. With Structural Warranty Insurance 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.
With no need to prove negligence you can save time and money, as well as avoid costly legal discussions.
4) Essential to the sales process
Generally, lenders insist on Structural Warranty Insurance being in place before they lend money to a buyer. So if you’re planning to sell your new build within the first 10 years, taking out this insurance is 100% a requirement for a smooth transaction.
5) Provides transferable cover
A property which comes with Structural Warranty Insurance is attractive is to buyers as they are assured (and more relaxed) knowing that potential future risks to the property structure are covered.
To make the whole process simple, Structural Warranty Insurance is easily transferable – it can simply be passed from one party to the next when a property is sold.
6) 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. Like we said above, having Structural Warranty Insurance in place means this isn’t needed as you simply need to prove that the defect exists.
Also, contractors could stop trading or go into liquidation. If this happens 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.
Finally, it could happen that a sub contractor is involved and for some reason they don’t make it into the Collateral Warranty agreement. If this is the case and they are responsible for the defect, you’ll find yourself with no real course of action.
Don’t forget, 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, but 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, so it pays to make sure each stage of the project is signed off as they happen.
If you have any questions about Structural Warranty Insurance and how it can help your project, give us a call on 0207 731 3700 or drop an Email at: firstname.lastname@example.org.