Latent Defects

Latent Defects Insurance/Inherent Defects Insurance is an indemnity insurance product now being used increasingly in new build projects for commercial and mixed use developments. It is also known as Inherent Defects Insurance (IDI) originating from the French Decennial Liability Cover.Summary of cover: 

6, 10 or 12 year policy, running from the date of the first legal completion, or in Scotland the date of entry on the premises.

The cover meets the cost of ‘putting right’ the Premises in the event of a Defect occurring in the Structural Parts. It is designed to protect property asset value from building defect liability.

A Defect is one that may change or destroy the property whilst it is insured, and has to manifest during the cover period.

The Structural Parts includes the parts of the Premises which are essential to the structural stability and waterproofing, such as walls, foundations, windows and roof.

In the event of a structural claim, additional areas of cover include:

The costs of demolition to allow rebuilding

Design and other fees in connection with putting right the building

Additional costs that may arise from the need to change design or construction to comply with new regulations, or with changes to regulations since the property was originally built

Costs of removing, storing and re-installing the contents of the property

Cost of providing alternative accommodation during the (re-)construction or repair

Limits and excesses:

High limits and variable excess options are available, to enable bespoke solution fitting with the clients risk management portfolio

The Sum Insured will be the re-build costs of the property, expressed as a monetary value in the schedule to the property

The limit for the additional areas of cover is 10% of the Sum Insured, up to a maximum of £250,000

An optional Waiver of Subrogation is available, promoting collaborative working as all the design and construction parties can be covered under one policy thereby significantly reducing the exposure to Professional indemnity claims.

Please contact for any further information.


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