Industrial warranty questions answered

A policy that pays for putting right damage caused by a defect in the design, workmanship or materials of the building that was not apparent at completion. On a commercial building it is often called commercial latent defects insurance (CLDI), inherent defects insurance or a structural warranty. See commercial latent defects insurance explained.

Usually not. No general rule makes it compulsory on an industrial or commercial unit. It is typically asked for by a buyer, investor, funder or tenant as part of the deal, and a funding agreement, agreement for lease or sale contract can make it a condition.

The structure - foundations, frame and load-bearing elements - and on many policies the weatherproof envelope, typically the roof and cladding. The floor slab is included by some policies and not others. Wear and tear, maintenance and fit-out are usually excluded. The policy wording sets out the detail.

Usually 10 or 12 years from completion, depending on the policy chosen.

Not as standard. Some insurers offer them as optional extensions, and they add to the premium. Loss of rent covers rent lost while covered damage is put right, within the policy limits - stock, business interruption and other trading losses are not normally part of latent defects cover.

Before work starts on site. The provider needs to inspect the ground works, foundations and slab as they go in, and registering at the start is usually the simplest and best value route.

Sometimes. The provider will want evidence of the work it did not see, may ask for further investigation and will usually charge more. Ask as early as you can. Our sister brand Retrospective Warranties specialises in cover after work has started.

The provider's surveyor, or an inspection service it appoints, inspects at key stages - typically ground works and foundations, the erected frame, roof and cladding, the slab where it is covered, and completion. The plan is usually set before work starts. See how it works.

Usually, yes, though it depends on the provider. On a multi-unit scheme many providers certify each unit at completion, so the cover can follow that unit when it is sold or let, while others cover the scheme under one policy. Shared roofs and common parts are dealt with in the policy wording.

Often, yes. Many policies can be assigned to later owners and to tenants for what remains of the period. The policy sets out how assignment works, including any notice or consent it needs.

A collateral warranty gives a third party a right to claim against the contractor or a consultant, which usually means showing a breach and relies on that firm being able to pay. Latent defects insurance is a policy with a provider or insurer that usually responds to covered damage without anyone having to prove fault, subject to the policy terms and claim conditions.

Under a full repairing and insuring lease the tenant is often responsible for repairs and, depending on how the lease is drafted, that can include damage caused by defects it had nothing to do with. An assignable policy gives the tenant a route to have covered damage put right. See investors, funders and tenants.

Funders and lenders have their own views on which providers they accept. We check the provider is likely to be acceptable before you commit, because cover a funder will not accept is of little use - but each funder and lender makes the final decision.

As a rough guide, around 0.95% of the rebuild cost for a commercial building registered before work starts (with no broker fee on top - we are paid by commission from the provider). Builds already under way and completed buildings cost more. The provider sets the final price after reviewing the scheme. See industrial warranty costs.

There is no broker fee to pay. We are paid by commission from the warranty provider, which is included in the premium. Every quotation sets out the premium and the provider's inspection and administration fees separately.

Our terms of business and a written statement of your demands and needs, so you know what is being arranged and with whom, before any cover is bought.

No. Industrial Warranties is an insurance broker - a trading style of Latent Defects, a trading name of Finance Delta Ltd, which is authorised and regulated by the Financial Conduct Authority. We arrange cover on a non-advised basis, and the policy is provided by the provider or insurer named in your quotation.