The Federation of Master Builders

Your guide to Latent Defects Insurance

Published date: 30 June 2023

As a housebuilder, you might need cover for new builds, conversions, renovations, loft conversions or commercial projects. You’re looking to protect your business throughout the build and your customers for the future. And that’s where Latent Defects Insurance comes in.


What is Latent Defects Insurance?

This type of insurance is designed to cover latent defects and water ingress that may arise in a newly built, renovated or converted home. It’s like everything you get with New Homes and Domestic & Commercial Warranties, but all in one package.

Our 10- and 12-year policies also include cover for: contamination of land, alternative accommodation, additional costs and fees, and removal of debris.


How does the cover work?

Your Latent Defects Insurance works over four periods of cover.

  1. The first period operates from the date the deposit is paid by the insured to the developer until the practical completion of each residential property is achieved, provided that this is stated in the Initial Certificate.
  1. The second period begins once the refurbishment/renovation/construction works of each residential property achieves practical completion, and from the date specified in the Certificate of Insurance. This section is in place for a period of 24 months – the Defects Insurance period.
  1. The third period takes place from the date of the 2nd anniversary after practical completion – where section two ends – for a period of 8 or 10 years as specified in the Certificate of Insurance – the Structural Insurance period.
  1. Once the refurbishment/renovation/construction works of each residential property achieves practical completion, the fourth and final period comes into effect for 10 or 12 years as specified in the Certificate of Insurance.


Why do your customers need Latent Defects Insurance?

This type of insurance covers your customer’s home for the future. It provides that all-important peace of mind to the homeowner or buyer and helps them to secure finance or mortgage funding, as our policy is widely recognised by UK mortgage lenders.


How is this type of insurance underwritten?

We underwrite each project on an individual basis, taking into account the size and complexity of your build as well as your build methods. To provide a quote, we’ll need an application form alongside technical information such as building regulations drawings, structural calculation, and project specifications.

We might also need to know the reinstatement value. This is the rebuild cost of any pre-existing structure and will be required if you are carrying out a conversion or structural work on an existing property like an extension, renovation or loft conversion.

As part of our due-diligence, we will need to review your accounts, or those of the developer, to confirm that you are in a position to undertake the 2-year developer/builder liability period.

Whether you’d like more information on how Latent Defects Insurance can protect your business or you’re ready for a quote, contact our team on 01353 652760 today.

Federation of master builders insurance

Complete construction support

We can manage all of your business protection under one roof, delivering the right policies for the right situations. Our insurance and warranty products include: Latent Defects Insurance, Public and Employers’ Liability Insurance, Professional Indemnity and more.

Tel: 01353 652760

Email: [email protected] 

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