It is often the case that Building works defects may not become evident until after completion of the project and regularly after completion of the defects liability period. These faults are known as latent defects.
Latent defect insurance provides cover for damage as a result of defective design, workmanship or materials, not discovered before practical completion.
The policy period is usually 10 years and can be extended to include; Loss of Rent, Component cover and Mechanical & Engineering damage.
It is becoming very popular with developers and investors as it provides cover for the owner of a new building should their investment suffer from damage caused by a defect in design workmanship or materials. The client has the comfort that there is a first party insurance policy in place to correct that defect.
The cover can be put in place by the developer, contractor, owner, investor or tenant and is fully assignable to all future owners, funders or tenants.
Benefits of cover for commercial and mixed use developments
First party insuranc
No delays over remedial works or establishing blame
No doubt over liability
No doubt over the ability to pay (insured by A rated underwriters)
Avoid delays in settlement
Meets tenant / owner requirements under full repairing lease
Meets funder requirements
Allows you to free up capital
Includes contractor insolvency
Makes re-sale more attractive
Helps attract tenants as they are protected
Means less exposure to warranty or PI claims
Covers the building (it’s not a warranty on the work)
The main advantage for the developer is that it provides a single point through which to recover the costs of repairs following discovery of a latent defect. The policy offers a simple alternative to relying on the contractual warranties.
The cost range is between 0.5% – 1% of the sum insured dependant on the type of project, experience of the contractor and financial strength of the developer / investor.
London Belgravia Brokers are specialist risk Insurance Brokers who will find you the best cover for your project at the most competitive rates. Our expertise lies in Latent defects, developer insolvency and loss of deposit cover for the UK Property sector.If you would like any further information please contact us T 0203 701 0420 E firstname.lastname@example.org W lbb.london