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Contract works insurance provides cover during construction and maintenance period. After handover, the owner has to prove that any damage was due to negligence of either parties involved. Option for the building owner would be to negotiate settlement with the parties or sue them. Both options could be lengthy, costly processes with no guarantee of success.

* Latent defects insurance offers assurance to the insured should their investment suffer from damage caused by a defect in design, workmanship or materials.

Risk
Insurers will take some form of risk assessment/technical audit of the property and/or construction site before offering cover.

A fee is agreed for this service and will usually be collected as a deposit premium. This is a proactive measure taken by insurers as an attempt to prevent loss and will provide dedicated additional resource to detect possible issue and areas of potential loss.

Some examples of issues ad areas of potential loss are:-

• Poor reinforcement in floor slabs
• Absence of wall tiles
• Lack of movement joints
• Roof membrane laid incorrectly

These risk assessments are taken by professional structural engineers.

Cover
The main elements of cover for building are:-

1. Structural defects
2. Ingress of water
3. Subsidence, landslip and heave
4. Threat of imminent collapse requiring immediate remedial works to prevent damage

..caused by a defect in design, workmanship or materials but not discovered before the inception of the cover

Cover can be granted in respect of plant and machinery. Cover can also be provided in respect of business interruption and will relate to loss income, rent or an increase in cost of working from arranging alternative premises. Cover periods vary in length. Policies can be issued for five, ten or fifteen years or longer.

Sum insured selected should represent the full reinstatement value of the building and should include:-

1. Professional fees
2. Debris removal
3. Demolition costs

Rating and underwriting factors
Underwriter will obtain details about the following:-

1. Insured
2. Building
3. Parties to the contract
4. The period of cover required
5. Sum insured required
6. Level of deductibles
7. Method of maintaining up to date sums insured

Market
Limited market dealt with by a specialist division or workforce dealing solely with the latent defects insurance. Cover available only to major property owners/developers or construction companies.