Global Courant
Insurance brokerage remains a puzzling area for the average layperson or woman. Like other branches of the insurance tree, the many complexities of this process tend to elude all but those with some training in the field, and the average insurance policy purchaser usually has a significant number of questions and doubts to voice. Fortunately, reputable commercial insurance brokers will make sure the process is as transparent as possible for their clients, often going so far as to explain certain specialist terms that are part of the industry jargon.
One such term, and one that applies specifically to property insurance, is “hidden defects insurance.” Unlike many insurance terms, some customers have an idea of what this term means; however, there are just as many who are still unclear about its exact meaning. Therefore, this article will attempt to clarify that issue, explaining why latent defects insurance plays an important role in the property insurance brokerage process.
What is latent defect insurance?
Dormant defects insurance, also known as structural guarantee guarantee or structural guarantee for short, is one of the most important parts of insurance on buildings and other similar properties. The purpose is to protect a policyholder against property damage resulting from defects in workmanship, structural planning, design or materials of the building.
Unlike other policies offered by commercial insurance brokers, hidden defect insurance does not require proof of fault, only proof of defect, an important nuance that can often help simplify and speed up the insurance process. Likewise, this type of policy does not rely on architect’s certificates, professional indemnity or collateral guarantees, allowing policyholders to protect their investment in a more cost-effective manner. Dormant defects insurance may not eliminate costs entirely if negligence is to be proven against one or more parties, but it nevertheless implies a significantly lower expense for the policyholder than would otherwise be the case.
When does the insurance for hidden defects apply?
Almost every structure is eligible for cover through latent defects insurance. It is usually used to cover commercial or residential buildings, but it’s not unheard of for such a policy to be taken out for a large parking lot or other less conventional structure. Of course suitability will vary by company, but most commercial insurance brokers are willing to work with the customer to try and arrange coverage for their structure, so it’s always a good idea for a potential policyholder to ask and see if and how this type of cover fits their specific situation.
What are the consequences of not taking out insurance for hidden defects?
Of course, as with any other type of clause or policy, individuals purchasing property insurance are not required to purchase hidden defects insurance. However, there is a good reason why most commercial insurance brokers recommend that their clients take out these types of policies, and why some clients even require it in advance. Simply put, restoring a faulty home can represent a significant investment of both time and money for everyone involved. At the very least, protecting the structure with latent defect insurance will give the property owner peace of mind, by ensuring that there is a remedy for any structural defects their property may incur. As mentioned above, this type of policy does not represent a one-size-fits-all solution; however, it does at least provide policyholders with some reassurance and can save them mental, physical and financial stress if structural defects are found in their property. This is the main reason why latent defect insurance is important to the structural insurance brokerage process, and why so many commercial insurance brokers advise their clients to purchase it.
Insurance for latent defects: a definition
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