Latent Defects

Latent Defects insurance is a cover that provides owners of new commercial and industrial properties protection against damage caused by defect in design, workmanship or materials, not discovered before the cover commences.

Historically, Contract Works cover would provide protection in the case of new works during the construction phase and the maintenance period of a new building. After the handover, an owner would have to prove that any damage was the result of negligence on the part of one or more parties to the construction contract. The options open to the property owner would be:

• Negotiate with the builders or design team to correct the problem
• Sue the builders or design team If they deny any liability. This process is likely to be protracted with no guarantee of success and is potentially complicated by:
• Legal action taking a long time to obtain compensation
• The possibility that builders or the design teams are uninsured or inadequately insured
• The builders or design teams have ceased trading

Latent Defects insurance enables a property owner to remedy a defect whilst allowing them to focus on running their business.