Latent Defects >>>

Professional Services Latent Defects Insurance

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Architects Draftsmen, Building Designers, Building Surveyors, Building Inspectors, Real Estate agents, solicitors, banks, financial institutions.

As important influencers of the building industry who are working closely with their clients to provide the best outcome for them and their development. Latent Defects Insurance should be a priority to ensure success of the venture.

What is Latent Defects Insurance?

Insurance to protect against Structural Defects that arise after completion for up to 10 years.

It is the nature of construction projects that faults and defects caused by failures in design, workmanship or materials, may not become apparent or detectable (even with the exercise of reasonable care) until many years after completion of the project, long after the end of the defects liability period. Latent Defects can be extremely expensive and disruptive to rectify.

Latent Defects Insurance indemnifies the insured for the cost up to the Indemnity Limit for the repairs to damage caused or for repairs to prevent imminent damage by the structural defect and is available for 10 years from the date of completion.

Who would be covered:

  • Residential Builders
  • Commercial Builders
  • Developers

What Will We Cover:

  • Apartment Buildings
  • New Home
  • Renovations/extensions
  • Offices buildings
  • Multi units, Townhouses , Dual Occupancy

Who are the winners of a Structural Defects Insurance Policy:

    • First resort policy where the owner does not have to take legal action as the policy activates in favour of the insured
    • 10 year policy transferable to a new owner
    • Repairs can proceed quickly without legal action. Occupant is put at less inconvenience
    • Lloyd's of London is the Insurer
    • Increases the sales value of the building
    • Increases the opportunity to acquire a better financial out come when seeking construction finance
    • Less risk for occupier as in the event of a legitimate defect the first resort policy will activate
    • There is no need to prove negligence

Why you need Latent Defect Insurance:

You do not have Latent Defects Insurance

Owners must carry out their own investigation, perhaps employing professional surveyors at their own expense to determine the cause of the loss
Owner makes a claim against the party responsible (if they are still in business). This may involve lengthy negotiation, and litigation to achieve a result. All the time, the building may continue to deteriorate
Owners will usually reach a negotiated or legal settlement for less than the full cost of the works. The owner must then execute the works, employing their own professional team and contractors
The owner still has a renovated property without any Latent Defects Insurance in place
Insured notifies a claim and insurers appoint independent loss adjusters (at their own expense) to investigate the claim and determine remedial action
If it is a valid claim, the insurers will pay for the loss within the terms of the policy (including the application of an excess) up to the Indemnity Limit, They have every incentive to remedy the defects quickly as their costs will only increase if there is any delay in carrying out repairs.
If another party is responsible for the defect the insurers take over the owner’s rights of subrogation and the owner is not involved in any litigation
The building is still covered by the Structural Defects Insurance for the balance of the 10 years subject to any remaining indemnity limit. Alternatively application can be made to have the full

The problem is these or any major structural Defects may happen in 3 - 4 – 8 – 10 years time, are you willing to take the risk ?


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