What is a structural warranty?

A structural warranty in plain English

A structural warranty is an insurance policy attached to a building rather than to a person. It is arranged by the developer before or during the build and it protects whoever owns the property during the policy period - the first buyer, anyone who buys from them, and the lenders who lend against it.

If a defect in the design, materials or workmanship of the structure comes to light after completion - foundations that move, a roof structure that fails, walls that crack because they were built badly - the policy pays for the repairs, up to the limits set out in the policy. The owner does not have to chase a developer who may have moved on or gone out of business.

That is why it is often called latent defects insurance: it covers defects that were hidden when the building was finished and only appear later.

What a structural warranty covers

Every policy is different, so the wording always matters, but most structural warranties cover the cost of repairing damage caused by defects in:

• foundations and ground floor slabs
• load-bearing walls, frames and the structural parts of floors and staircases
• the roof structure, and on many policies the roof covering
• the waterproof envelope - external walls, render and cladding, windows and doors - where the policy includes it
• below-ground drainage, on some policies

What is not covered is just as important. Wear and tear, normal shrinkage, lack of maintenance, decorative finishes, kitchens and appliances, and damage that is covered by ordinary buildings insurance are usually excluded. We will point out the main exclusions when we quote.

How the 10 or 12 years work

Most policies start on the date the home is completed and run for 10 years. Some providers offer 12. Many policies split the period in two:

• The first two years are often a defects period, when the developer is responsible for putting right defects and the policy steps in if they do not.
• The remaining years are the structural insurance period, when claims go to the provider or insurer directly.

The cover passes automatically to each new owner for whatever is left of the policy period, which is one of the reasons buyers and lenders value it.

Certificates for every home

When a development is registered the provider normally issues an initial certificate or cover note. Its surveyors then inspect the work at key stages. When each home is finished and signed off, a final certificate is issued for that home. It is this certificate that the buyer's lender and advocate will ask to see, and it needs to be kept safe for the life of the policy.

Why lenders and buyers ask for one

A mortgage lender is lending against the value of the home for 25 years or more. If the structure fails, so does their security. That is why most lenders expect a new or converted home to come with a structural warranty from a provider on their approved list - or, for some lenders and some schemes, a professional consultant's certificate from an architect or surveyor who monitored the build.

Buyers want the same reassurance, and developers benefit too: homes with a recognised warranty are easier to sell and to refinance.