Last edited 06 Aug 2019

Post-completion insurance

Post-completion insurance (more usually known as latent defects insurance) provides cover for latent defects. These are failures in design, workmanship or materials that may not become apparent until many years after practical completion of the project and long after the end of the defects’ liability period.

This form of insurance provides cover for new building work or for work on existing buildings. It is seen as providing more complete cover for defects than other methods (such as collateral warranties) which may require proof of breach of contract. Any party with an interest in the property (eg owner or developer) can be the insured (policy holder), but it can also be the funder or an incoming tenant who has repair obligations under a lease.

Available for a period of between 8-12 years from the date of final certificate or practical completion, post-completion insurance typically covers defects in the structure and weatherproof envelope of the building – but no other defects.

Whether an insurer decides to provide cover will depend on whether they are confident and satisfied regarding the original construction. However, when cover is provided, it usually involves significant premiums. For example, in the case of a contract works value of £2,500,000, a latent defects policy will likely cost around £25,000 to £30,000; when bearing in mind the excess is normally 1%, ie £25,000 of the sum insured, the first £50,000 (in this example) of any claim will have to be met by the insured.