There’s no better peace of mind for a homeowner than having a 10-year structural warranty insurance in place to cover the cost of repairing any structural defects that may arise in a new build property during the first 10 years of its life. As an insurance policy, a homeowner is covered for risks that are not included in standard buildings insurance such as:
– Roof Framing Systems (Joists and Trusses)
– Floor Decking and screeds
– Chimneys and Flues
– Waterproof envelope
– Roof coverings
– Contaminated land for brownfield sites
– Repairing, replacing and rectifying water ingress
– Load bearing assets (such as foundation systems and footings, beams and girders, floors and staircases, lintels, walls and partitions)
The builder or developer of a property will usually take out the policy on behalf of a homeowner and register the owner of the property on the policy. This is also transferrable to a new owner in the event that the property is sold within 10 years and remains valid until the end of the 10-year period (or 12 years in the case of housing associations).
PCC (Professional Consultants Certificate)
As with a structural warranty, the optimum time to arrange a PCC is before the build has started so that key monitoring inspections can be actioned throughout the build, meaning full risk assessment can take place and enable cover for the stated insurance period.
However, there are times when a structural warranty is not in place on a building under ten years old, possibly because of an invalid policy (through the demise of an insurer), or perhaps because the property is a self-build.
In these instances, it is still possible to satisfy the criteria set by mortgage lenders with a retrospective Professional Consultants Certificate (PCC).
A PCC is a faster, more cost-effective way of providing a form of cover for a property under 10 years old that will ensure that an owner is not in breach of mortgage terms by not having a latent defects policy or PCC in place. A PCC will cover most types of residential properties and is accepted by many lenders nationwide.
What’s the difference between a Structural Warranty and a PCC?
Although both do provide a form of cover for properties under ten years old, there are major differences;
A PCC is not an insurance policy – a PCC is a certificate that guarantees that the property has been subject to an inspection by a professional consultant who is accredited to an industry body such as the Royal Institute of Chartered Surveyors (RICS) and that the property satisfactorily meets building control standards.
Should any latent defects arise from the date of the certificate, a claim would be viable on the Professional Indemnity Insurance of the professional that issued the certificate. Indemnity limits vary between professionals although typically, a claim can be made up to a £500,000 limit.
A PCC is cheaper than a Structural Warranty – It is true that a PCC is cheaper than a full warranty, even more so than a full retrospective warranty. However, it is important to bear in mind the protection afforded by both forms of cover and your reasons for requiring cover.
Fewer documents are required to arrange a PCC – This makes arrangement of a PCC much easier than a warranty, especially when original documents relating to the build and the risk assessment process are not available to hand.
A PCC lasts for a duration of 6 years – Whilst a full warranty provides a standard 10 years of insurance cover (12 years for some housing associations), a PCC will only provide cover for 6 years.
The age of the property and again the reason for the required cover will need some regard when bearing in mind that if the property is only one or two years old, there will be a period within the 10 years of build completion that is without cover, which can lead to complications if the property has a mortgage or if the owner wishes to sell the property.
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As a form of protection against any legal action that is a result of any defects in a new build property, indemnity insurance is often used in conveyancing transactions.
House sellers often take out a policy to cover any cost implications from a buyer making a claim against their property. This insurance requires a one-off payment and has no expiration date.
Buyers are also able to take out indemnity insurance as an alternative to paying for the cost of rectifying a defect in a newly bought property. If they are otherwise happy with the property, then it saves the buyer having to ask the seller to fix the problem and can enable a house sale and mortgage application to go smoothly.
Indemnity insurance policies can cover a wide range of risks, although most standard policies include:
– Planning permission irregularities
– Building regulations irregularities
– Restrictive Covenant breaches
– Chancel repair liability
– Absence of easements for access rights
– Missing particulars on deeds or documents relating to the property
– Absence of build over agreement for sewers
– Adverse possession for lack of evidence over land ownership
Indemnity Insurance is a much cheaper alternative to a structural warranty or PCC with policies starting from as little as £30 and although they are rarely required to pay out, they are a cost-effective way to protect buyers or sellers from future liabilities and can reduce delays to a house sale.
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.