Latent Defects Insurance (sometimes abbreviated to LDI) is a policy that covers a property build or extensive renovation in the event that a structural problem emerges after the works are complete. While not common, it is possible for some structural defects to take some time to come to light, which is why most latent defects insurance policies provide cover for 10 years after the construction is signed off.
Benefits of latent defects insurance
The benefits of having this kind of policy in place include:
- The costs of remedial works will be covered if a structural issue arises
- The cost of rebuilding will be covered if the problem means that demolition is required
- Peace of mind for the property owner
- This type of policy/warranty is required by most mortgage lenders for new build properties so having it in place can minimise any delay or problems in this area when selling the property
- The insurance cover can be flexible, to include elements that meet the needs of the property in question
- If the property is sold within the cover period, the remainder of the policy can be transferred to the new homeowner
Who might need to buy latent defects insurance?
The kinds of construction projects that are ideally suited for latent defects insurance include new builds, extensions to an existing home, a significant renovation when structural work is involved or when a building is changed from commercial use into a residential property. That means that this type of cover may be bought by:
- Property developers
- The construction firm responsible for the works
- An independent contractor doing the work
- Someone self-building their home
- Private property owners who have carried out extensive work to the home e.g. an extension
As mentioned previously, it’s common for latent defects insurance to be required for a mortgage lender to agree to lend on a property, so if the home is going to be sold at any point then this type of cover will be needed. Find out more about why you should choose Advantage for latent defects insurance cover.