Who needs latent defects insurance?

If you work in the building and construction industry, you will have heard the term latent defects insurance. In summary, it is a form of insurance taken out on new property builds that covers any structural defects for 10 years after building is complete. Latent defects cover is required by UK Finance for all new build residential properties. Yet what exactly is a latent defect, why is insurance necessary and who needs this insurance? Here we will try to answer some of the most common questions about having a latent defects insurance policy and why it is important.

What is a latent defect?

A latent defect is a previously undetected fault that is discovered after construction is complete. For it to be classified as a latent defect, the fault needs to be undetectable by standard observation and inspection procedures made during the construction period. In contrast, faults detected during inspections or observations are known as patent defects. The term latent defect can apply to any constructed object, from personal possessions such as home appliances and power tools to homes and commercial properties. For properties, latent defects can arise in areas such as the structural frame, cladding, foundations and roofing. In cases where a latent defect is found and causes damages or injury, the affected party may be able to make a claim even if the defect was previously undetectable. That is why it is important to have a latent defect warranty in place.

What is a latent defects insurance policy?

Latent defects insurance UK, also known as inherent defects insurance, structural warranty or decennial insurance, is designed to cover the costs of rebuilding or repair work where major damages have occurred as a result of latent defects. Major damages can range from conditions that require urgent remedial action to the partial or complete destruction of property. It was introduced in the UK as a response to government legislation enacted in the wake of poor building practices in the 1930s. Since then it has become either a statutory requirement or a prerequisite in many countries around the world. Today, latent defects policies can cover a wide range of properties, including new residential and commercial buildings, renovated or converted buildings, student accommodations, hotels, listed buildings and more.

Why is cover for latent defects important?

If you are a home owner, it is important that you have cover for latent defects in place to protect you in the event of any unforeseen issues. The policy provides cover for any defects identified up to 10 years from the issue of the building control completion certificate. Insurance for latent defects is designed to offer the following benefits:

• Consumer protection that allows the buyer or investor to trust that the property has been built in accordance with original drawings and specifications and in compliance with current building standards.
• Offers the policyholder peace of mind that they will not have to prove any negligence should a defect be found, making the process of making a claim for repairs a much simpler process.
• Ensures that design and construction standards remain high and are consistently met. This includes ensuring all materials used are fit for purpose, and that workmanship and construction methods are up to the highest standard.
• Provides transparency on behalf of all affected parties, from the reporting process through to the technical audit provided by building surveyors.
• Offers security to financiers that the building has been constructed according to the highest standards and thus their investment is secure from immediate devaluation.

For further information take a look at our Latent Defects page or please contact Ed, Kelly & Issy on tel: 01284 365345 or email: ed@granitebw.co.uk / kelly@granitebw.co.uk / issy@granitebw.co.uk