Insurance & Warranties
A quick guide to Building Warranties
It’s wise to consider a structural warranty for your self build project. Indeed, many lenders insist on a 10-year warranty for a self-build mortgage. This covers the cost of any repairs due to structural defects as well as any legal fees if action needs to be taken against a designer or contractor for negligence. The warranty automatically transfers to successive house owners after the first 12 months following completion.
Apart from peace of mind, a structural warranty is useful too if your circumstances change and you need to sell the property within the 10-year guarantee period. It is likely that your prospective purchaser’s lender will insist that a warranty is in place before releasing any money.
Structural warranties differ from an architect’s certificate which only provides cover in the event that negligence can be established against the architect. This will be covered under their professional indemnity insurance but only for a period of six years and it will not cover workmanship or defective materials.
A structural warranty responds immediately as a ‘prime’ policy and the insurers will then take on recovery action against those responsible.
So how do they work?
Many selfbuilders may be unaware that it is not obligatory to use Building Control to get Building Regulations compliance or carry out inspections. Warranty providers such as Self-Build Zone can arrange this through an independent network of ‘partnered’ approved inspectors.
However, a warranty provider working in conjunction with Building Control does offer advantages. Buildzone says it can normally have a surveyor to site within five working days of notification, avoiding unnecessary delays.
A nominated surveyor will be assigned to the project from start to finish and a formal plan check carried out along with checking calculations. This ensures the design complies with the various regulations.
The second option is not to use Building Control. If a Building Regs application has already been made then you will need to request a warranty without Building Control. A warranty provider can then arrange for a suitable schedule of technical audits to be carried out throughout the project.
A warranty covers the cost of rebuilding or rectifying damage attributable to a defect in the design, workmanship or materials of the building’s original specification. It also extends to the costs of making good any defect in the design, workmanship or material caused by the drainage system.
Damage caused by defects in the waterproofing elements of the house are also covered along with defects in chimneys and flues.
What isn’t covered are the usual small defects, such as cracked plaster, collectively referred to as ‘snagging’ in new builds.
by Mark Herbert, broker with Construction Insure
Selfbuilders should check that their builders have suitable insurance. Inadequate cover puts homeowners who have hired them at risk of liability if things go wrong. Using insurance comparison websites often leads to buying an inadequate policy. Insurance is a minefield but for a highly dangerous industry like construction, it’s vital that the right cover is in place.
Builders must have both public liability and employers’ liability cover. These protect against third-party injury or death, damage to a property as the result of a project and staff being injured or falling ill as a result of work. Other covers listed below may or may not be included within a policy so it’s always worth checking. They offer builders extra protection against loss of tools and equipment, sickness and loss of earnings, and legal expenses.
This cover protects against the injury or death of third parties or damage to a property as a result of a project. Premiums will be based on the work being carried out, the size of the firm and claims record. An indemnity limit for £5m is the average.
Covers staff injured at work, as well as former employees who have become ill as a result of their work whilst they were in employment. Builders cannot trade without this cover.
Covers against claims of personal injury or property damage from products made or supplied by the builder.
Can be taken out by any trade. It covers the cost of contracts for new builds and extensions/alterations. For instance, during the build if there is a fire, flood, storm, vandalism or theft it would cover the cost to rectify the damage.
Contractors All Risk
Includes cover for contract works, and both the builder’s own plant as well as hired plant, but not liability.
Covers public liability, employer’s liability, contractor’s all risk and contract works.
This covers costs linked to compensation awards, employment disputes, compliance and tax investigations.
Tools and Equipment
This insurance covers the costs related to damage or theft of tool and equipment.
Professional indemnity covers against claims of professional negligence especially for design and construction.
Personal Accident and Sickness
This is aimed at construction business owners and provides cover for costs that come from being unable to work full-time after an injury or illness.
Covers costs and loss of income for builders unable to operate due to illness, injury or other issues outside their control such as flooding, fire or theft.
Usually known as a 21.2.1 it protects against any non-negligence claim from clients or a neighbouring property.
Unoccupied Property Insurance
The property being worked on is covered and the insurers are aware of all works being carried out.