Structural Warranty vs Buildings Insurance: What’s the Difference and Do You Need Both?
If you were wondering if you need both, you probably do.
A structural warranty and buildings insurance are not two versions of the same product, and one is not a substitute for the other.
They cover completely different types of risk, and if you only have one, you have a gap. For anyone buying, selling, or developing a new build, understanding the difference between structural warranty and buildings insurance is essential before you exchange contracts or draw down a mortgage.
The confusion is understandable. Both are technically “insurance,” both get bundled into completion paperwork, and both often get mentioned in the same breath by conveyancers and lenders.
But they were built to do different jobs, they’re arranged by different parties, and they run on entirely different timelines.
In this guide we explore the instances where you would need one, and the differences between a structural warranty and building insurance.
What is a Structural Warranty?
Before we delve into the detail of what a structural warranty covers, let’s look at what it is.
A structural warranty is a 10-year insurance policy (or 12-year policy in the case of Housing Associations) that covers defects in design, workmanship and materials in a newly built or significantly renovated home.
It provides an important layer of protection that can cover the cost of partial or complete rebuilding in the event of structural failures.
This includes structural failures in elements like:
- Foundations
- Drainage systems
- Waterproof envelopes
- Chimneys and flues
Unlike buildings insurance, which covers damage from external events like storms or flooding, a structural warranty addresses latent defects that arise from the construction process itself.
Simply put, the difference between a structural warranty and buildings insurance is that a structural warranty steps in when subsidence occurs due to poor workmanship and buildings insurance takes over for damage caused by environmental or external factors.
What a Structural Warranty Covers
A new build warranty is designed around one specific risk: defects that are inherent to the construction itself.
It covers faults that only become apparent after the building is finished and occupied – subsidence caused by poor foundations, roof failures from bad workmanship, or water penetration from defective damp-proofing are all classic examples.
The type of problems it covers are not sudden one-off events; they’re issues that are baked into the building from the first day of construction that take months or years to surface. This is why structural warranty cover is typically structured in stages rather than as a single flat policy:
- Pre-completion cover: protects the buyer’s deposit if the developer becomes insolvent before the property is finished.
- Year 1-2 (defects liability period or DLP): the developer is directly responsible for fixing defects that fail to meet the warranty provider’s technical standards, with the warranty provider stepping in if the builder won’t or can’t.
- Years 3-10: the warranty provider insures against major structural defects directly, regardless of whether the original builder still exists or is still trading.
This staggered structure is deliberate: it’s designed to survive builder insolvency, which is one of the main reasons lenders insist on it.
It’s also why a structural warranty is usually arranged and paid for by the developer before construction starts, but the protection belongs to whoever owns the property. It transfers automatically to each new owner for the remainder of the term when the building is resold.
What Buildings Insurance Covers
Buildings insurance works on an entirely different basis.
It covers sudden, unforeseen events that damage the physical structure of the property that are incurred through external environmental factors like: fire, flood, storm damage, escape of water, theft, vandalism, subsidence caused by tree roots or ground movement (as distinct from subsidence caused by poor foundation design, which falls to the structural warranty), and accidental damage.
Here are some of the incidents that buildings insurance covers:
- When a pipe bursts and floods the kitchen
- If a storm rips tiles off the roof
These are incidents, not construction defects and critically, buildings insurance policies explicitly exclude damage caused by inherent structural faults.
There’s also a practical difference in who arranges buildings insurance and when.
A structural warranty comes with the property and is set up by the developer before a building is handed over after completion.
Buildings insurance does not come with the property – it’s the buyer’s responsibility to arrange it themselves, and it needs to be in place from the point of legal completion (sometimes from or at the point exchange, depending on the contract), not sorted out afterwards.
| Structural Warranty | Buildings Insurance | |
|---|---|---|
| Covers | Defects in design, workmanship, or materials | Sudden environmental events: fire, flood, storm, theft, and accidental damage |
| Typical term | 10 years from completion | Annual, renewed each year |
| Arranged by | Developer/builder (before construction) | Buyer/homeowner (from completion) |
| Does it survive builder insolvency? | Yes | N/A |
| Does it transfer on resale? | Yes, automatically for the remaining term | No – the new owner arranges their own policy |
| Required by mortgage lenders? | Yes, on new builds under 10 years old | Yes, from day one of the mortgage |
Why You Need Both
This is where the two products stop overlapping and begin to complement one another.
A structural warranty will not pay out if your house floods or burns down, it’s an insurable event. Buildings insurance, in turn, will not pay out if your foundations were poorly designed and start to subside. Insurers will point to the exclusion for inherent defects and decline the claim.
Structural warranty and buildings insurance fill in each other’s exclusions.
What Mortgage Lenders Actually Require
Most mainstream mortgage lenders in the UK require both a structural warranty and buildings insurance, as a condition of lending on a new build property, and this is formalised in the UK Finance Mortgage Lenders’ Handbook (the industry-wide framework most solicitors and lenders work to).
For properties under 10 years old, the handbook requires solicitors to confirm an acceptable new home warranty is in place before completion. Lenders also require evidence of a valid buildings insurance policy from day one of the mortgage. No lender will release funds without it.
Lenders have a list of structural warranty requirements.
Both need to be arranged before completion and need to stay in force for as long as the mortgage does. If the original warranty provider isn’t on your specific lender’s approved list, it can hold up or even block your mortgage offer.
Common Misconceptions About the Two Types of Cover
There are a few misconceptions about the two types of cover. Here are a few common questions that get asked a lot about structural warranty and building insurance, and our answers to them.
“My warranty covers the house, does this mean I still need buildings insurance?”
No, the warranty only covers construction defects, not the fire, flood, storm and theft risks that buildings insurance exists for.
“Will my buildings insurance cover any structural problems, since it is a comprehensive policy?”
No, standard buildings insurance policies specifically exclude inherent defects, faulty design and issues arising from poor workmanship. This is the gap that a structural warranty closes.
“Is the warranty only useful if the builder still exists?”
No, the insurance-backed years of a structural warranty (typically years 3-10) are specifically designed to protect you regardless if the original developer is still in business or not.
Let Compariqo take care of your structural warranty needs.
If you’re buying a new build and need to arrange your structural warranty, Compariqo makes it easy to compare structural warranty quotes from trusted providers side by side.
We eliminate the guesswork so that you can get the right cover in place before project completion.
Compare structural warranty quotes today.