What are the Benefits of Latent Defects Insurance?
Latent defects insurance, while not a legal requirement, is an absolute must for developers and property owners, as it ensures that the cost of repairing structural damage that was caused by an issue in design or construction does not fall on you. The benefits of latent defects insurance can not be ignored – it could save you valuable time, money and leave you with peace of mind.
First of all, the most obvious benefit of latent defects insurance is that it could save you a lot of money. Without it, the cost of a repair or rectification of a problem with your property could be steep, as a court case would be necessary in order to establish who is responsible for the problem. These can prove very expensive – with insurance, a court case can be avoided as there is no need to assign blame.
Another key benefit of latent defects insurance is that it enables any structural defect to be repaired as quick as possible. Again, with court cases, the process can become very long and tedious, as a huge amount of documentation is required. This is particularly important if your property is acting as a business or is providing housing for tenants, as a time-consuming court case may interrupt your income. With insurance, your potential income is restored as quickly as possible.
Having latent defects insurance may make your property more marketable and easy to sell. Often, when two similar properties are offered for sale, buyers are more inclined to choose a property with insurance. Since latent defects insurance is fully assignable, and can have an infinite number of changes in ownership within the usual 10 year period after a property is constructed, subsequent buyers are able to make use of this entire period, and if they decide to sell within the 10 year window, will consequently make an easier sale.
The lack of the need to place blame or establish cause of a defect is another important benefit of latent defects insurance. All that is required for a repair is the confirmation of the presence of a defect – also, you are able to choose the contractor that you would prefer to carry out the repair. It is not necessary to use the original contractor (though you can should you choose to). Establishing who is to blame for a defect is often even more difficult than finding out the cause – it is sometimes a combination of problems with design, materials and craftsmanship.
Lastly, all mortgage lenders require latent defects insurance to be in place before they will lend money against a property that is new or under 10 years old. So, latent defects insurance will give you one less potential hurdle to cross when applying for a mortgage for your new property. It allows any potential lenders to view you and your property as less of a risk, therefore giving you a smoother and less stressful process of getting your mortgage sorted.
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