28 Oct 2016

Explaining structural defects insurance for house-building projects

The complexities of insurance can be intimidating for many in the construction industry and it is easy to see why. In this article, Steve Mansour, Group CEO of construction insurance specialist CRL, explains the ins and outs of structural defects insurance for house-building projects.

As legal documents, it is necessary for insurance contracts to be packed full of dense legal terminology – leading many to dismiss it as simply another regulatory hurdle to be overcome.

But getting to grips with the details of structural defects insurance can help to protect a house-building project from any unsuspecting issues. In addition to structural defects, there are a number of other insurance requirements that need to be met by those working in the house-building sector.

While it is recommended that developers undertaking new build projects seek advice from their respective insurance and financial advisors in order to understand their exact requirements, here are the basics you need to know about structural defects insurance.

Also known as a home-builder warranty, structural warranty, structural insurance or latent defects insurance is a special kind of cover used for new homes.

Most new homes will come with a two-year developer warranty period and during this period of time the developer in question will be responsible for putting right any issues covered under the warranty.

The reason a structural defects warranty is important is that structural defects in new homes can take time to become apparent, which means structural faults can appear after the two-year developer warranty has expired.

Should this happen, with the 10-year home-builder warranty in place, the homeowner will be covered for the costs to repair or rebuild the faulty aspects of the property. Usually, structural defects specialists will help protect you against things such as faulty building materials, like lintels or steel supports, a faulty architectural design of the home that leads to structural problems, or issues such as land contamination. It is important to always check exactly what you will be covered for.

Mortgage lenders require that a structural defects warranty is in place on every new build property before mortgages are approved. Once the build is complete, the warranty passes from the contractor to the owner of the property.

Other types of insurance that need to be taken into consideration when undertaking any new build project include: employers and public liability, commercial vehicle insurance, All Risks policies and inspection contracts and plant protection. For further information about these types, please visit the CRL website.

Remember to talk to your insurance advisor to discuss the specific requirements of your house-building project.

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