Major projects

What does Latent Defects Insurance mean for major construction projects?

Latent Defects Insurance, commonly known as LDI, is an insurance policy designed to protect property owners and developers against potential defects in building materials, construction quality, or design. This type of insurance policy is typically taken out during the construction phase of a building or within a specific timeframe after its completion.

Latent Defects Insurance covers any inherent defects that may not be immediately apparent but later cause physical damage or loss to the structure or waterproofing envelope of the building. With LDI coverage, property owners can have peace of mind knowing they are protected against the financial risks associated with latent defects.

In the past, collateral warranties served as a reliable means of satisfying funders and involved parties for many commercial developers. However, more and more developers are opting for commercial latent defects insurance to safeguard the interests of all those involved in the project.

Upward view of a construction crane surrounded by steel beams, set against a blue sky with scattered clouds.

Benefits of securing a latent defects insurance policy for commercial projects:

  • Provides financial protection against any issues that may arise from latent defects in the structure of the building.
  • Helps to minimise disputes between parties involved in the project, such as funders, contractors, and developers, by clearly outlining the responsibilities and liabilities of each party.
  • Offers peace of mind to property owners, tenants, and future buyers by ensuring the building is safe and structurally sound.
  • Can help sell or lease the commercial property, as it demonstrates that the building has been built to a high standard and is protected against potential defects.
  • Reduces the chances of costly legal battles in the future by providing an alternative means of resolving disputes that may arise due to structural issues.

Build-Zone Commercial Latent Defects Insurance is a specialised insurance policy that caters to new constructions and transformations of commercial and mixed-use developments, regardless of size. This coverage includes many properties, such as student accommodations, offices, care homes, retail units, and industrial units.

Features of Build-Zone Commercial Latent Defects Insurance:

  • Cover available for loss of rent and alternative accommodation
  • Reduced cost and risk in comparison to collateral warranties
  • Waiver of subrogation rights possible
  • Flexible financial limits can be agreed upon subject to referral
  • Makes re-sale more attractive & is fully transferable to subsequent owners
  • Cover can be arranged on completed or part-completed properties
  • The policy covers the structure of the building for 10 or 12 years, with defective weatherproofing covered from year two.
Construction site with a partially built multi-story building and two large cranes against a cloudy sky.
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Each case of Latent Defects Insurance is carefully underwritten by globally
‘A’ rated insurers.

Our in-house team, Build-Zone Survey Services Limited (BZSS), handles all technical services for your project. BZSS can arrange building control for you through one of their partnered approved inspectors, with each inspection being meticulously audited by BZSS to provide you with added assurance.

If Building Control has already been arranged elsewhere, one of BZSS’s partnered approved inspectors conducts technical audits to ensure that the project meets the standards required for the warranty’s issuance. Both insurers and Build-Zone recognise the significance of this service, which is reflected in the premiums charged. The earlier BZSS is involved, the more significant benefit that can be achieved.

Technical services support from the start

To make sure every new build we cover is built to the highest standard, we have an in-house technical team, Build-Zone Survey Services Ltd (BZSS), who can help you save money on your premium.

BZSS can work with you from the start of your project – carrying out a set of technical audits by an approved inspector throughout the build to minimise the risk of any issues arising in future. They can also arrange building control with one of their partnered approved inspectors, with every inspection audited by BZSS for your peace of mind.

The sooner BZSS are involved, the bigger the benefit for you