FCA authorised · FRN 724952 0117 325 0027Quote & buy →
Property development
Latent defects insurance, also called a structural warranty or new home warranty, pays to fix hidden defects in a building’s structure and weatherproof envelope that appear after completion, without anyone having to prove negligence. Developers usually need it because mortgage lenders typically will not lend on a new or converted home without a warranty or a professional consultant’s certificate. On commercial schemes, funders, purchasers and tenants often ask for it. Arrange it before work starts on site.
Part of: Commercial insurance at Apex
In short
A structural warranty is a building-specific insurance policy, usually for at least 10 years on new homes, covering structural and weatherproofing defects and passing to each later owner. UK Finance’s Warranty Guidance says lenders typically expect a minimum of 10 years, with builder default and insolvency cover in the first two. It is different from contractors’ all risks (damage during the build), PI (negligence claims against designers) and buildings insurance (sudden events after completion). Defective Premises Act claims can now be brought for 15 years, so warranty and liability cover both matter. Cover is normally arranged before work starts.
Last reviewed 7 October 2026 by the Apex commercial team.
Latent defects insurance pays to put right a defect in the structure or weatherproof shell of a building that was hidden at completion and only shows itself later. It is sold under several names: structural warranty, new home warranty, building warranty and, on commercial schemes, inherent defects insurance. The policy is attached to the building rather than to the builder, so it usually passes to each later owner, and a claim normally does not depend on proving that anyone was negligent.
That is what separates it from the other covers on a project, each of which has a different job:
| Cover | Who needs it | What to check |
|---|---|---|
| Contractors’ all risks (CAR) | The contractor or developer, during the build | It protects the works against physical damage such as fire, flood or theft until practical completion. |
| Structural warranty / latent defects insurance | The developer buys it; the buyer, lender or later owners benefit | The period, what counts as the structure and the waterproofing envelope, the sum insured per property, and whether the first two years depend on the builder. |
| Professional indemnity (PI) | Architects, engineers and design and build contractors, and developers who carry design responsibility | PI pays only if negligence is proved. It is claims-made, limits are often shared, and fire safety or cladding exclusions are common. |
| Buildings insurance | The owner or freeholder, from completion onwards | It covers sudden events such as fire, storm and escape of water. Defective design, workmanship and materials are usually excluded. |
Buyers and lenders rely on the warranty because it can respond even if the developer has gone or the designers’ PI has lapsed. See contractors’ all risks insurance.
For new homes the main driver is mortgage finance. UK Finance publishes the Mortgage Lenders’ Handbook. Section 6.7 covers newly built, converted and renovated homes, and UK Finance explains that lenders will typically lend on these only if the property has a warranty or a Professional Consultant’s Certificate. Its FAQ is clear that there is no central list of acceptable warranty providers: each lender decides which it will accept.
UK Finance’s Warranty Guidance (October 2025) describes what lenders typically expect from a warranty product. In summary:
A Professional Consultant’s Certificate is the alternative. A qualifying consultant, from a body listed in the Handbook, visits during construction, certifies the work and stays liable to buyers and their lenders for six years from the certificate, backed by their own PI. Check with buyers’ likely lenders before relying on one.
Commercial schemes have no equivalent handbook. A funder’s facility agreement, a purchaser’s heads of terms or a tenant on a full repairing lease may ask for latent defects insurance instead of, or alongside, collateral warranties from the contractor and consultants. Check the period, who is named and any waiver of subrogation.
| Law | What it says | Why it matters to a developer |
|---|---|---|
| Defective Premises Act 1972, s.1 | Anyone taking on work for or in connection with providing a dwelling, whether by building, conversion or enlargement, owes a duty to the person ordering it and to every person who later acquires an interest. The work must be done in a workmanlike or professional manner, with proper materials, so that the dwelling is fit for habitation when completed. Under s.1(4) a business that arranges for others to do the work is treated as having taken it on. | A developer who subcontracts every trade still owes the duty to each buyer and later owner. |
| Building Safety Act 2022, s.135 | Inserted s.4B into the Limitation Act 1980 from 28 June 2022. Claims under s.1 or s.2A of the 1972 Act can be brought within 15 years of the cause of action accruing, which s.1(5) fixes at completion of the dwelling. For s.1 rights that accrued before 28 June 2022 the period is 30 years. | Homes completed in the 1990s can still produce claims, and new homes now carry 15 years of exposure, longer than a standard 10-year warranty. |
| Latent Damage Act 1986 | Extra time to sue in negligence where damage was not discoverable, subject to a long-stop. | Applies to commercial as well as residential buildings. See our Latent Damage Act 1986 overview. |
Section 135 and the Defective Premises Act apply in England and Wales. Note the mismatch it creates: a warranty that expires at year 10 does not end a developer’s statutory exposure, so a developer’s own liability cover still matters after the warranty period. Part 5 of the 2022 Act adds remediation duties for some developers of buildings with fire safety defects; our guide to developer remediation under Part 5 covers that.
Developers registered with the New Homes Quality Board must follow the New Homes Quality Code, and buyers of their homes can take complaints to the New Homes Ombudsman Service. That sits alongside the warranty.
Wordings differ, so treat this as a guide to what to ask, subject to the policy terms.
| What this policy usually covers | Often excluded or limited | Needs a different policy |
|---|---|---|
| Defects in the structure: foundations, load-bearing walls, frames, floors and roof structure | Wear and tear, shrinkage and normal settlement cracks | Fire, storm, flood and escape of water after completion (buildings insurance) |
| Failure of the waterproofing envelope that lets water in: roof coverings, external walls, windows and doors | Finishes, decorations and fittings outside the defined structure or envelope | Damage to the works before completion (contractors’ all risks) |
| Newly laid below-ground drainage within the plot, on many residential policies | Mechanical and electrical services, unless bought as an extension | A designer’s negligence claim that falls outside the warranty (the designer’s PI) |
| In the early years, the builder’s failure to fix defects, including its insolvency, on many new home products | Defects already known or reported before cover starts | Injury to visitors and neighbours (public liability) |
| Cost of remedial works, and often alternative accommodation and professional fees | Loss of rent and consequential losses, unless added on commercial products | Developer’s liability beyond the warranty period (developer PI or liability cover) |
Commercial inherent defects policies are often written for 10 or 12 years and can usually be extended to loss of rent and mechanical and electrical plant. See our glossary on latent defects insurance and inherent defects insurance.
The usual practice is to arrange the warranty before work starts on site. The insurer, or a technical auditor it appoints, reviews the design and then inspects at key stages, typically foundations, frame or superstructure, pre-plaster and completion.
Once building has started, cover is harder to get. Some providers offer warranties on completed or part-completed buildings, but UK Finance’s guidance expects these to rest on a Building Regulations completion certificate and a risk-based assessment of the structure. Expect opening-up works, extra conditions or narrower cover, and possible delays to sales.
Underwriters usually focus on these points:
The scenarios below are illustrative. They show how defects typically appear and which cover is likely to respond, not real claims or outcomes.
Put these in your first email and terms come back faster:
Apex helps you prepare the information lender-approved warranty providers ask for, and works with over 30 insurance markets, including Lloyd’s syndicates through wholesale brokers, for the related covers.
A complete proposal gets better terms than a bare one, and a broker can only present what you tell us. Have these ready:
Speak to a broker
Structural warranty cover, placed by a named broker
Send us your current schedule, or tell us about the property if you are arranging cover for the first time. Or leave your number and a named broker will call you back, usually the same working day.
Apex Insurance Brokers is an independent insurance broker based in Bristol, established in 2009 and authorised and regulated by the Financial Conduct Authority. We are not tied to one insurer: we work with over 30 markets, including Lloyd’s syndicates through wholesale brokers, and every client has a named broker who handles the placement, mid-term changes, certificates for clients and the renewal.
Latent defects insurance pays to repair hidden defects in a building’s structure and waterproofing that appear after completion. It is also called a structural warranty, new home warranty or inherent defects insurance. It usually passes to later owners and normally pays without proof of negligence, subject to the policy terms.
No law requires a developer to buy one. In practice, mortgage lenders typically lend on new, converted and renovated homes only where there is a warranty or a Professional Consultant’s Certificate, as set out in UK Finance’s Mortgage Lenders’ Handbook.
UK Finance’s Warranty Guidance says lenders expect at least 10 years on new homes, with the builder’s defects period and insolvency covered in the first two years. Commercial inherent defects policies are commonly written for 10 or 12 years. Check when the period starts.
Sometimes, but it is harder. The usual practice is to arrange cover before work starts, so inspections can follow the build. For part-built or finished buildings, some providers will assess the structure, often with opening-up, a Building Regulations completion certificate and extra conditions. Cover may be narrower, and it can delay sales.
Contractors’ all risks covers physical damage to the works during construction, such as fire, flood or theft, and usually ends at practical completion. Latent defects insurance starts around completion and covers defects in the structure and envelope that show up later. A development usually needs both.
It can. Lenders treat conversions of barns, offices and single homes into flats, or the reverse, as needing a warranty or consultant’s certificate. Underwriters usually ask for a structural survey of retained elements, and cover for the original structure is often narrower than for new work.
Tell us about your development and we’ll talk you through the warranty route and arrange the related covers. Or call 0117 325 0027.
Start your quote Call 0117 325 0027Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information, not advice on your individual circumstances. Cover is always subject to the insurer’s acceptance and the policy terms, and this page does not guarantee that cover will be available or on what terms.
