What is a retrospective warranty and how does it work?


Most insurance policies in all walks of life are designed to protect one or more parties from things that happen in the future and won’t cover anything that has happened in the past. However, in the construction industry, a retrospective warranty is different. We look at what it is, how it works and who might want this kind of cover.

What is retrospective warranty?

Retrospective insurance for a building is a kind of warranty that provides protection for the homeowner if something serious goes wrong with the property’s structure within the first 10 years after it was built or after a major renovation. Sometimes referred to as a completed home warranty, a retrospective warranty for a building is sometimes used if a project is nearly or fully complete when bought, if it doesn’t already have a structural warranty in place.

How do retrospective structural warranties work?

Once you apply for retrospective insurance, site visits and a survey will take place to assess the building structurally. This will help to determine the insurance premium offered and whether any exclusions will apply. Once the premium and any necessary tax has been paid, the building will be covered retrospectively for serious structural issues.

Who might need a retrospective warranty?

In an ideal world, developers or contractors would start a construction project or extensive renovation and the same team would see it right through to completion. However, in the current climate, it’s fairly common for projects to be sold before they are fully finished. This can often mean that they haven’t had a warranty inspection due to the stage of the project, so no structural warranty is in place at the time of sale. As a result of this, the buyer can’t know exactly what occurred in the previous stages of construction, so a retrospective insurance policy to cover the structure of the building can mitigate the risk that the buyer takes on. Most properties will be unmortgageable without a warranty like this in place.

Those most likely to take out a retrospective insurance policy include:

  • Anyone selling a property that has been built, had major renovations carried out or has been converted within the last 10 years which doesn’t have an existing structural warranty
  • Anyone buying a property with the same criteria as above

If you want to find out more about a retrospective warranty, our team would love to hear from you. Get in touch today.

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Advantage Home Construction Insurance (AHCI) provides structural defects insurance – operating nationally with offices in Warrington, London and Birmingham – offering development-related insurances and a service designed to give customers peace of mind.

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