If you’re responsible for a new build construction, or a significant renovation or conversion project, latent defects insurance is something that you’ll need to consider, sooner, rather than later. It’s essentially an insurance policy that covers the structure of the building being worked on, in case serious defects that are not found during a standard inspection later come to light.
We look at four major reasons why developers, construction firms and self-builders should take out this kind of cover on their projects.
1. To satisfy mortgage lenders
Mortgage lenders will not lend money to a buyer for a new or recently renovated or converted property if this kind of cover is not in place by the time the property is sold. This is because if a defect does come to light and requires significant remedial work or even a total rebuild, the lender would lose money or the asset itself without latent defects insurance cover.
2. To give peace of mind to buyers
Latent defects insurance usually lasts for 10 years, so means that when the property is sold, the buyer can make the purchase with confidence because they know that there is insurance cover in place if a structural defect does make itself known once they have completed the property transaction. This means that the cost of remedial works or rebuilding will be covered if needed, for the 10 years after the project is completed.
3. To pass on assurance to future homeowners
As the latent defects insurance cover lasts for 10 years, it means that if the property is sold again during this time period, the remaining duration of cover can be transferred to the new homeowner, giving them a measure of peace of mind too.
4. To protect the developer or builder from future claims
With latent defects insurance in place, the insurer will pay out for remedial works or rebuilding costs if they are needed, which means that the developer or construction firm are protected from this liability by the policy.
Having latent defects insurance cover in place before the project’s completion is a must for those responsible for the construction or renovation work, so that things can move forward as required and to ensure that lack of an appropriate warranty doesn’t slow down any potential sale of the property.
If you want to know more, get in touch with us about latent defects insurance.