Latent Defect Insurance (LDI), sometimes referred to as a New Home Warranty, is an unusual animal in the insurance world. It is one of the only types of insurance that a policyholder inherits from someone else as opposed to buying it themselves, and that can cause problems.
Typically, a developer of a new home will buy an LDI product before or during the construction period. Once that house is complete, they then pass that policy to the homebuyer. The new homeowner has never dealt with the insurer or their distributor, they weren’t involved in what was purchased or what level of cover is in place, and there is usually no way of changing the cover they have.
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So what do they do if they have a problem, or need to make a claim?
Policy documentation provided to the buyer on completion should include details of how to make a claim on their policy, this usually involves first contacting the broker that sold the developer the policy in the first place. If that’s not progressing, they can escalate their issue to the insurer directly, and ultimately if there is no resolve; the Financial Ombudsman who will assist in finding a resolution.
What many homeowners are unaware of, is before that process escalates, there are other avenues to progress. Most distributors of LDI in the UK are members of a CTSI (Chartered Trading Standards Institute) Code of Conduct (a list of these Code’s can be found on the CTSI website). These Code’s are there in part, to assist homeowners who may be having issues with the builder post-completion, or are struggling to get an issue progressed with their LDI provider. These Code’s also include dispute resolution services that are available to the homeowner.
Many policy provider and brokers in the market act on behalf of the insurer they sell products for, and unfortunately there are instances where it is in their interest to keep claims low and they therefore may not progress a homeowner claim efficiently.
It is also typical in the LDI market for brokers not to make customers and homebuyers aware of the services that are available to them through these Consumer Code’s.
It is important for homebuyers to understand what cover they are getting with the purchaser of their new home, who provides that cover, what options are available to them in the event that they need to make a claim, and crucially; what support is available to them in the event they are not getting their claim properly handled.
At Compariqo, we invest heavily in our people and in providing good customer service and product training. We promote choice in the market, and an open and transparent way of dealing with customers.
For more information about Compariqo you can call 0151 808 0314 or fill in the from below.
Need cover on a project?
As an independent broking business, Compariqo is focused on arranging structural warranty and insurance cover for residential developments for our customers. As well as a suite of complementary insurance products to meet the demands of developers and SME builders, we can also source a wide range of finance solutions through our relationship with one of the UK’s top business finance specialists and their extensive panel of lenders, meaning we can cover all of your construction insurance and property finance needs.