What is a Latent Defect Policy

People want to ensure that a construction project is protected even after completion. For many reasons, if you own a building or are the developer of a building, you’ll want to ensure that the building is insured. A latent defects insurance policy is a policy that makes sense for a building.

What is a latent defect policy all about?

Latent defects insurance gives developers and owners the coverage needed for damages from a latent or inherent defect in a building.

What are the things that latent defects insurance covers?

Suppose a building has insured damage due to an inherent defect in workmanship, design, or materials in how a building is structured. In that case, you can get coverage with latent defects insurance. The range will typically include the entire sum to replace or repair the damage and prevent further damage. You can normally get coverage for 10 or 12 years after the practical completion of the building. It can also be assigned to new property buyers as long as sold during the 10 or 12-year period. Furthermore, some tenants mandate that a facility has a latent defect policy before they take on the lease.  So it’s important to be aware of that.

Why is a latent defects policy necessary?

You may be under the assumption that just because your advisers or contractor has professional indemnity insurance or collateral warranties, you don’t need a latent defects policy.

While professional indemnity can cover your costs if professional negligence causes a defect, it won’t cover poor materials or workmanship. In addition, there could be the complication of a financial limit on a professional indemnity policy, which ends up limiting the claim payout. In addition, you’ll have to prove the negligence that created the defect. Furthermore, collateral warranties are rarely tested. In addition, they could have expired, which depends on when the defect occurs.

Finally, most of the defects become apparent a few years after the completion of the development. Therefore, possibly due to economic circumstances, the contractor is no longer operating when you need to make a claim according to Surplus.net.

When it comes to latent defects insurance, the insurers will manage the claim on your behalf and determine whether or not to go after any third parties, which won’t affect the claims process.