Latent defects insurance provides cover for newly constructed commercial and industrial buildings against structural defects for a specified period, normally 10 years.

An essential feature of the insurance is the appointment of a technical auditor to undertake design checks and periodical site visits during the construction of the building.

The insurance will be effective from practical completion and will cover

• the cost of repairing damage to the structure,
• the cost of remedial action to prevent imminent damage arising from a defect in the structure itself and
• any resulting damage to non-structural parts of the building.

The cover can be extended to include weatherproofing and waterproofing as well as the engineering services such as heating and air conditioning.

The sum insured is based upon the reinstatement cost at practical completion, supplemented by an inflation provision over the policy period.

The minimum excess required by Insurers is £25,000 and it is not unusual for sums of £100,000 to be required.

The policy may be assigned to purchasers and the interest of tenants can be noted.