Structural Warranty Insurance

What is a structural warranty?

A structural warranty, also known as a building warranty or latent defects insurance, is a type of insurance policy designed to protect property owners, developers and builders against defects in newly constructed or renovated buildings.

Unlike traditional insurance policies that cover damage caused by external factors, like fire or natural disasters, a structural warranty specifically addresses issues arising from faults in the design, workmanship or materials used during construction.

How does structural warranty insurance work and how long does it last?

Structural warranty insurance typically provides coverage for a specified period, commonly ranging from 10 to 12 years, although the exact duration will vary depending on the insurer and the policy terms.

During this coverage period, if structural defects manifest in the building – such as problems with the foundations, roof, walls, or any other structural components – the insurance policy covers the cost of repairs or remediation.

What does a structural warranty cover?

Structural warranties are typically broken down into two sections, the Defect Liability Period and the Structural Warranty Period. Here’s a breakdown of what a typical structural warranty covers:

Defect Liability Period ( 0-24 Months)

The defect liability period (also referred to as DLP) is the time frame in which a builder is responsible for fixing defects in their work. This is usually the first 0-24 months but you should always refer to your insurance policy for clarification.

The contractor is responsible for fixing any defects caused by faulty materials or workmanship.This could be for things such as:

• Structural defects: Cracks in walls, uneven floors, faulty foundations
• Water damage: Plumbing issues, leaky roofs, water ingress such as damp or flooding
• Electrical faults: Faulty wiring, non-functioning switches
• Defective materials: Poor quality materials, incorrect installation
• Poor workmanship: Unfinished tasks, unsatisfactory execution of work

However, please be aware that DLP doesn’t include appliances that you connect to your utilities like ovens or washing machines.

Structural Warranty Period (Years 3-10)

This covers the remaining eight years of the warranty. During this period, the warranty provider is responsible for covering the cost of repairs to structural defects including the below:

• Structural integrity: Protects against major structural failures like cracks, subsidence, or collapse
• Water ingress: Covers issues related to water damage caused by faulty building work
• Damp: Protects against damp problems caused by construction defects

What doesn’t structural warranty cover?

Although structural warranty can cover a number of things that have been outlined above, there are certain things that are usually not covered that you should be aware of. These can include:

• Wear and tear: Normal day to day wear and tear is not covered, like scuffs or chips from simply inhabiting the property.
• Accidental damage: Damage that is caused by accidents or external factors such as adverse weather conditions is not included.
• Maintenance: Routine maintenance and repairs such as repairing gutters or plastering are the homeowner’s responsibility.
• Landscaping: Issues related to landscaping or garden features are usually excluded from structural warranty cover.

It is worth noting that the specific coverage of a structural warranty can vary depending on the provider and the terms of the policy.

Therefore it is imperative that you review the policy documents carefully to understand the exact scope of protection in terms of what is and isn’t included.

How much does a structural warranty cost?

The cost of structural warranty depends on a number of factors such as;

Project stage: Early quotes are usually cheaper, this is because there are fewer uncertainties and risks for the insurer.

Project size and complexity: Larger, more complex projects usually cost more.

Builder’s experience and finances: Experienced builders with sound track records can sometimes qualify for lower premiums.

Location and construction type: Locations, materials used and construction methods alter the risk profile of a project and, therefore, the cost of the structural warranty.

Whilst there is no set cost for structural warranty as it is case dependent, if you want to quote your specific project then you can speak to one of our structural warranty experts by contacting us directly or by filling out a non-obligation structural warranty quote.

Can a structural warranty be transferred to a new property owner?

Yes, structural warranty can usually be transferred over to the new owners of the property. This means that when you sell the property, the remaining warranty period will be passed on to the buyer.

However, it’s important to note that you should check the specific terms of the structural warranty policy, as some providers may have certain conditions or fees associated with the transfer process.

Who can benefit from having structural warranty insurance?

A structural warranty serves multiple stakeholders involved in the construction process:

Property developers

A structural warranty offers developers protection against potential financial losses resulting from structural defects that may surface after completion of the project.

It enhances their credibility and provides assurance to buyers or investors regarding the quality and durability of the construction.

Homeowners

For homeowners purchasing newly constructed properties, a structural warranty provides peace of mind by safeguarding their investment against unexpected structural issues that may emerge in the years following the purchase.

It reassures them that any covered defects will be addressed without imposing a significant financial burden.

Builders and contractors

By obtaining a structural warranty, builders and contractors demonstrate their commitment to delivering high-quality construction projects.

This insurance helps mitigate their exposure to liability claims related to structural defects, thereby protecting their reputation and financial stability.

Why do I need a structural warranty insurance policy?

A structural warranty is essential for several reasons, offering critical protection and peace of mind to property owners, developers, builders, and contractors.

Here’s why you need a structural warranty:

Financial protection

Structural defects in buildings can lead to costly repairs or even structural failures, resulting in significant financial losses.

A structural warranty provides coverage for these unforeseen expenses, helping to mitigate the financial burden associated with rectifying defects that may arise after construction.

Long-term assurance

A structural warranty typically covers a specified period, often spanning several years after completion of the construction project.

This extended coverage offers long-term assurance to property owners, developers, and investors, ensuring that structural defects discovered within the warranty period are addressed promptly and without additional financial strain.

Risk management

Construction projects inherently involve risks, including potential errors in design, materials, or workmanship.

A structural warranty serves as a crucial risk management tool, transferring the risk of structural defects from property owners, developers, and builders to the insurance provider.

By mitigating these risks, a structural warranty helps to protect the financial stability and reputation of all parties involved in the construction process.

Enhanced marketability

Properties covered by a structural warranty are perceived as more attractive and trustworthy in the real estate market.

Having the assurance of a structural warranty can increase the marketability of newly constructed or renovated buildings, leading to quicker sales and higher property values.

Peace of mind

For homeowners, a structural warranty offers peace of mind knowing that their investment is protected against potential structural defects.

It eliminates the fear of unexpected repair costs and provides reassurance that any covered issues will be addressed promptly, allowing homeowners to enjoy their property with confidence.

How do I obtain a structural warranty?

To obtain structural warranty for your project firstly you will need to submit your details to CIR to get a quote. From there, one of our experienced advisers will assess your case and get back to you with a personalised quote.

From this point, a surveyor will review your development. Once your build is complete and all conditions have been satisfied, your Certificate of Insurance from CIR will be issued, meaning your buyers or tenants will be covered for 10 years under our policy.