14 April 2025

A Guide to Latent Defects Insurance

By Build Zone
Latent defects insurance LDI

At Build-Zone, we specialise in providing comprehensive LDI cover for commercial, residential, and mixed-use developments. In this guide, we answer key questions to help you understand what LDI is, who needs it, what it covers and how much it may cost.

What Is Latent Defects Insurance?

Latent Defects Insurance, also known as Structural Warranty or Inherent Defects Insurance, is a specialist policy designed to cover the cost of repairing or rectifying defects in the design, materials, or workmanship that become apparent after construction is completed.

These defects are often not immediately visible—hence the term “latent”—and may only manifest months or years after a building is in use. Unlike professional indemnity insurance, which requires you to prove negligence, LDI responds on a ‘no fault’ basis, making it a more straightforward route to claim for structural issues.

What Does Latent Defects Insurance Cover?

Build-Zone’s Latent Defects Insurance provides extensive protection against:

  • Structural damage to foundations, load-bearing walls, beams, roofs, and floors
  • Defects in waterproofing that lead to water ingress
  • Faults in materials, design or workmanship that compromise the structural integrity of the building
  • Partial or total collapse of the structure due to these hidden defects

It typically includes cover for a period of 10 to 12 years from the date of practical completion, with options to tailor coverage depending on the complexity and risk profile of the project.

Who Takes Out Latent Defects Insurance?

LDI is typically taken out by the developer, property owner, investor, or funder before construction begins. In many cases, it is also a requirement of mortgage lenders and financial institutions, particularly for:

  • Commercial property developments
  • Residential new builds and conversions
  • Mixed-use developments
  • High-value or complex major projects

At Build-Zone, we also cater for unique self-build and custom-build projects, ensuring non-commercial builders can access the same protections as larger developers.

How Much Does Latent Defects Insurance Cost?

The cost of LDI can vary widely based on several factors:

  • Size and type of development (commercial, residential, mixed-use)
  • Construction cost and total build value
  • Risk profile of the building (design complexity, location, materials)
  • Duration and scope of cover required
  • Quality of design and construction teams

As a rough guide, premiums often range between 0.5% and 1.5% of the total build cost. Major projects, especially those involving high-rise or unusual architecture, may be priced differently and require bespoke underwriting.

At Build-Zone, we provide tailored quotations through our experienced underwriters who assess each project on its individual merits. Discover more about our approach to major project warranties.

Why Choose Build-Zone for Latent Defects Insurance?

Build-Zone is one of the UK’s leading providers of LDI and structural warranties. Our cover is:

  • Accepted by most major mortgage lenders
  • Underwritten by ‘A’ Rated insurers
  • Supported by a team with over two decades of underwriting experience
  • Flexible and tailored, including bespoke options for major and specialist builds

Whether you’re a developer, funder or project manager, our expert team can advise on the most appropriate coverage for your specific build, ensuring long-term protection and compliance with financial stakeholders. Latent Defects Insurance is not just a regulatory requirement; it is a critical safeguard against future structural risks. With a no-fault basis for claims, long-term protection, and lender acceptance, LDI is an indispensable tool in modern construction.

Explore your options today by visiting our page on Commercial Latent Defects Insurance or get in touch with the Build-Zone team for a tailored quote.

 

Latest News