Latent Defects Insurance

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Latent Defects Insurance

  • Protection in the event that a problem is discovered years after construction
  • Professional Indemnity covering defective design, system, or wrong building process
  • Product insurance covering defective or faulty part used in construction
  • Cover periods 8 – 12 years from completion
  • Cover available up to a full rebuild cost
  • Pay annually or one off

Latent Defects Insurance protects you from the costs of repair work and product replacement in the event that a defect in a building becomes apparent months or years after construction.

It’s not uncommon that construction issues or defects only become apparent at a point where damage is already being done. It might be that even a comprehensive survey has failed to spot a problem. Latent Defects insurance provides financial cover at the point where an issue is detected and requires remedy.

BJP Insurance Brokers provide insurance advice and solutions to all kinds of entities including property owners. You may want to protect your buildings from issues through latent defects insurance.

What is Latent Defects Insurance?

When an individual or company buys a building, the hope is that it is soundly designed and constructed. However, this is not always the case – and defects can show up, sometimes dramatically, years later. The problem may be one of either:

  • A defect in the design, system used for the construction, an erroneous building process.
  • Defective part, materials.

A Latent Defects Insurance policy gives the property owner the ability to claim for the cost of any damage directly from the insurer, cutting out the inevitable expense caused by delays in trying to recoup costs from the original contractor responsible for the work (who may no longer be trading, retired, or who may attempt to pass the blame on to a subcontractor, adding a further layer of delay, confusion and frustration).

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Latent Defects Insurance

Post-build cover for property defects

Who needs Latent Defects Insurance?

If you buy a property of any description that is less than 12 years old, either through your business or as an individual, Latent Defects Insurance could be a wise investment.

Sadly, problems arising from latent construction defects are not uncommon, and can have serious consequences for property owners just at the time when they were expecting to see a return on their investment.

Even though in most cases the owner could theoretically prosecute the constructor for the latent damage, in practice this often involves insurmountable obstacles – and in the meantime, the damage can have a knock-on effect (e.g. loss of rental income), costing the owner even more time and money.

Latent Defects Insurance came into being to provide rapid pay outs for property owners in this tricky position. It is designed to create a straightforward and uncomplicated remedy – so there is no burden to prove negligence or breach of contract.

Are you planning on making house improvements to your newly purchased property? Whether you are professional developer running multiple projects or a house owner in the process of refurbishing or extending your house, BJP can assess your situation and offer a collection of covers best suited to your needs under a Property Developers Insurance.

Impartial advice, fast quotes

Talk to our broking team today about Latent Defects insurance

How much does Latent Defects Insurance cost?

Potentially, a Latent Defects Insurance policy will cost less than you think. When it first became available in the late 1980’s, a policy would typically costs somewhere in the region of 1.3% – 1.7% of an agreed rebuild cost. However, it is typically significantly less than this now. Cost of latent defects insurance can vary significantly depending on a range of factors, and every quote should be tailored you the specific building in question.

Speak to one of our expert broking team today. They will be happy to take your details and recommend a policy based on your particular requirements.

What kind of damage does Latent Defects Insurance policy protect against?

Defects can arise in almost any area of construction – which is why blame is so difficult to establish. They could occur in either the design or construction phase of the project, and they could be attributed to an individual subcontractor or various different subcontractors.

Examples of Latent Defects Claims

House nearly collapses due to unsound foundations

The owner of a house noticed cracks in the walls that seemed to get worse over time. The problem was checked by his insurer, proving that faults in the construction of the foundation had led to differential settlement, putting the house at risk of collapse.

Result: Fortunately, the owner of the house held Latent Defects Insurance, meaning that his insurer paid out the large sum needed to correct the problem.

Failure to seal foundation wall leads to basement flooding

The constructor of a block of flats failed to ensure that a foundation wall was insulated to make it impermeable. Over time, rainwater seeped through the adjacent soil into the wall, weakening it to the extent that it cracked. During a particularly wet spring, the basement of the building flooded, causing thousands of pounds worth of damage to residents’ vehicles.

Result: If the owner had had Latent Defects Insurance in place, she could have claimed the expense directly from her insurer, rather than chasing the contractor through the courts – a lengthy and frustrating experience.

Wall collapsed due to failed piling

The foundation timber of a granny flat was inadequately treated by the constructor. This led to an unacceptable degree of settlement, which over time weakened the structure of the building and eventually caused a wall to collapse.

Result: The property owner had Latent Defects Insurance in place, and was able to claim for the cost of the damage from her insurer, solving the problem much more quickly than if she had sued the constructor.