What is Latent Defect Insurance (LDI)?
Latent Defect Insurance is sometimes called Structural Warranty Insurance or Structural Guarantee. Latent Defect Insurance is designed to indemnify the Policyholder against claims discovered in the insurance period. Policies are designed to cover the cost of complete or partial rebuilding or rectifying work to the property which has been affected by major damage attributable to defect in the design, workmanship or materials.
Why should I consider Latent Defect Insurance?
In short, to protect your investment. This product does not rely on Architect’s Certificates, Collateral Warranties and Professional Indemnity and it doesn’t require proof of fault, just proof of a defect. Having to prove negligence to one or more parties involved in the construction contract and then negotiate settlement could prove costly, but not as costly as suing should they deny liability.
What Types of Development can be covered?
Residential and almost any commercial property.
We have even arranged cover of a Multi Storey car park!
What are the consequences of not having Latent Defect Insurance?
Re-instating a property which has suffered a defect could be a long drawn out process and recovering losses a costly process. Latent Defect Insurance provides you and your customers with the knowledge that if something does go wrong there’s a robust solution to keep them running when they need it most. No negligence needs to be proved – Just the discovery of a defect in the property.
Without suitable cover, re-instating a property which has suffered a defect could be a long drawn out process.Having to prove negligence to one or more parties involved in the construction contract and then negotiate settlement could prove costly, but not as costly as suing should they deny liability. This assumes they are around to sue!
Risks to the building owner
Council of Mortgage Lenders Requirements
When a mortgage is required for a new build residential property*, the lenders usually require a minimum 10 year warranty to be in place.
Taken from the CML Hand Book Part 2
*6.7.1 If the property has been built or converted within the past ten years, or is to be occupied for the first time, you must ensure that it was built or converted under a scheme acceptable to us (see part 2 for the list of schemes acceptable to us and our requirements).
The certificate must not contain any 'reservations', i.e. items not covered by the individual policy.
Who asks to see evidence of a Structural Warranty in the purchase of a newly built or converted building?