What is Latent Defects Insurance and how much does it cost?
by Bregs Blog admin team
The following opinion piece was submitted by a registered architect on 4th June 2014.
The representative body for architects (RIAI) President Robin Mandal recently said that “that the biggest weakness is a lack of an insurance system for “latent defects“. He added… “If the only solution for a consumer is to go through the courts, then the system is flawed.” (see link here). We have previously reported that RIAI Policy is that Latent Defect Insurance is an essential component of an effective Building Control system.
So what is Latent Defects Insurance and how much does it cost?
CRL, one of the insurance providers in the Irish Market, says:
“Latent defects insurance is an insurance that covers against unexpected on non-visible defects, poor workmanship (wooden beams, interior bricks), inadequate materials or bad design in general. Usually the defects are not discovered until work completion.
These are generally defects that cannot be seen on close inspection and are usually hidden and would need to break through areas of the property in order to access and view the extent of damages.
What is covered under the latent defect insurance? That depends on the company, but usually damages caused by structural defects, , ingress of water land movement among other things. The policy covers the cost up to the maximum amount insured. Do speak to your provider for more information on what is covered in your policy.
Latent defects insurance (LDI) covers residential and commercial property, mixed use properties and it covers self-builds as well” (link here)
There are a least 4 Insurance companies offering structural warranties in Ireland, Global Home Warranties (see link here) , Build-Zone Structural warranties (see link here) and Core Warranty (see link here). The other insurance company offering structural defects insurance in Ireland is Homebond (see link here).
We have been kindly informed by a reader that although UK based, BuildZone and Self-Build Zone have been providing structural warranties in Ireland for over 5 years.
This article from Building Magazine explains LDI in the UK. (for article see here).
The cost of LDI is typically between 0.5- 1.5% of the construction cost of the building.
Other posts of interest:
What is PI Insurance? – click link here
8 Questions for Professional Insurer – click link here
Alarming Legal opinion: BC(A)R SI.9 – click link here
Assigned Certifiers facing jail? BC(A)R SI.9 – click link here
Problems with role of Design Certifier: BC(A)R SI. – click link here
Press- RIAI: High-rise buildings and quality developments the way forward – click link here
Edit: expanded list of LDI Insurance companies added.