Latent defects insurance—why is it required and what is covered?
Produced in partnership with David Savage, Construction partner at Charles Russell Speechlys
Latent defects insurance—why is it required and what is covered?

The following Construction practice note produced in partnership with David Savage, Construction partner at Charles Russell Speechlys provides comprehensive and up to date legal information covering:

  • Latent defects insurance—why is it required and what is covered?
  • Overview
  • What are latent defects?
  • Latent defects insurance
  • Nature of the cover
  • Key attributes of latent defects insurance
  • Exclusions
  • Main benefit
  • Warning
  • The type of construction and the type of project

Overview

In normal circumstances the only recourse available to a building owner, on discovering a defect, is to seek recovery from the contractor or from the members of the design team. Under traditional procurement methods, the contractor and the design team may have different types of liability and may not be able to accept full responsibility for the cost of remedying the defects in the building. Typical difficulties faced by a building owner in such circumstances include contractor insolvency, the degree of contribution required from each party responsible for the defect, whether the design team’s professional indemnity policy answers to the claim and, if so, whether there has been timely notification under the policy. Latent defects insurance potentially helps the building owner or occupier to avoid many of these pitfalls. It can provide immediate funds to effect repairs for insured losses without the need for borrowing or self-funding. Repairs are likely to be carried out more quickly and legal costs may be avoided. These policies of insurance are also likely to reduce a contractor’s or consultant’s insolvency risk.

In this Practice Note we will look at latent defects insurance, the key attributes of this class of insurance policy, the standard exclusions, the advantages and the disadvantages.

What are latent defects?

A patent defect is discoverable and may be open to view—it is exposed, manifest, evident or obvious.

A latent

Popular documents