Advantage Home Construction Insurance (AHCI) navigates through the often complex world of structural warranties required by mortgage firms, providing some clarity for self-builders
A structural defects warranty (also known as latent defects insurance) covers defects affecting newly built properties. Structural warranties also cover existing properties, including converted and refurbished residential developments. This article specifically focuses on structural warranty cover for self-builders.
A structural warranty generally lasts for 10 years on new build properties. Specific policies can differ in the detail, but they will offer comprehensive cover against major structural defects and will usually include:
- Two years’ builder warranty against defects
- A further eight years’ structural insurance
- Contaminated land cover
- Deposit protection if your builder becomes insolvent.
If you require a self-build mortgage, it is likely that your mortgage provider will require that you have a structural warranty before they agree to release any funds.
Even if you don’t need a mortgage and are not planning on selling your self-build, you may still require a structural warranty, which will cover any rebuild costs that can arise as a result of defective design, workmanship or damage to materials that occur during the build period, but which are not discovered until after completion.
WHAT DO WARRANTIES COVER?
Warranties typically cover major structural elements such as foundations, roofs, ceilings, load bearing walls and stairs and glazing in outside walls. Warranties don’t cover general wear and tear, superficial damage or damage caused by storms or other adverse weather conditions.
Some self-builders choose an architect’s certificate (which may cost less than a structural warranty). However, a structural warranty provides more protection and mortgage providers may insist that you provide a structural warranty, rather than an architect’s certificate, on this basis.
The old adage ‘you buy cheap, you buy twice,’ has never been more true. When it comes to developments, ‘every pound is a prisoner,’ but there are certain things you shouldn’t cut corners on, and your structural warranty is probably one of the main ones.
The reason being that it’s this final certificate that allows you to complete on the sale of the development. In the past, various offshore insurers have gone out of business, leaving the unsuspecting purchaser or developer with a warranty that isn’t fit for purpose. At AHCI we have helped hundreds of people who’ve found themselves in that position to obtain a suitable and acceptable final certificate to suit their needs.
IS IT SIMILAR TO HOME INSURANCE?
Home insurance is provided on the basis of likely risks to a property and can cover both the building and its contents.
Almost all homes are insurable, including older properties, although costs can vary significantly. New home warranties and insurance policies are only concerned with the structural integrity of your home, not its fixtures and fittings, and are usually only available for newly built or newly converted homes. Structural warranty providers work closely with self-builders, carrying out site visits in accordance with current social distancing guidance.
WORKING WITH SPECIALISTS
You are not legally required to have structural warranty cover for your project.
However, as mentioned above, if you require a self-build mortgage, you will be likely to be required to have one. Also, should you wish to sell your self-build within the next 10-years, it will be very difficult to do so without a structural warranty covering the property. Also, working with a structural warranty specialist may help you to avoid potential issues arising during the build and can provide peace of mind during the construction stage and beyond.
The leading approved providers of structural warranties adhere to the Consumer Code. The code features a dispute resolution scheme that you can use during the first two years should a dispute arise between yourself and your structural warranty provider.
The steps to take to secure structural warranty cover for your self-build are firstly, fill out an application form and request a quotation, then review it, and pay the requisite survey fees and deposit. Finally, arrange for a full plan/specification check and subsequent survey. At this time, existing defects will be noted and will be either corrected or excluded from cover. As a footnote, it’s good to know that structural surveys can still be carried out during the current coronavirus restrictions.