How does structural warranty cover work?

The option of buying a new home is becoming increasingly popular, with initiatives to make home ownership more affordable and the attraction of low-maintenance homes finding favour with younger and older generations alike. Most new homes come with a structural warranty, but what does this mean for you, and how does warranty cover work?

 

Why do we have structural warranties?

To understand what a structural warranty is, it’s useful to know where they came from. They date back to Napoleonic times, when the “French Civil Code” made the people involved in building a structure directly liable for it for 10 years.

In the UK, the period between the first and second world wars saw a huge housing boom but there was little in the way of legislation to ensure what was being built was of a good standard. So the Government made builders hold back 10% of the cost of the build, as a guarantee that if anything should go wrong in the first two years, the builder would step in and fix it.

It wasn’t until the 1960s, more than 150 years after the French introduced their code, that the first 10-year structural warranty, similar to what we today, came into practice in the UK.

What are the benefits of structural warranties?

Three groups of people benefit from a structural warranty: the insurer, your builder, and you as the homeowner.

How does a structural warranty work?

A structural warranty is bought by your builder or developer, but actually protects you, the homeowner, against structural damage that may occur during the first 10 years after your home is built. If you are not handed information about your warranty when you buy your home, you should request it from your builder/developer.

Most warranties have two main periods of insurance:

  1. Defects Insurance Period: this is typically one or two years after your home is built, during which time your builder or developer is responsible for putting right any defects that lead to major damage. If they refuse to rectify defects or contest your claim, the warranty should provide a conciliation service. Remember, defects are not the same as snagging, as this article explains. Some warranty cover policies will also provide insolvency cover, protecting your deposit should your developer or builder go bust during the build period.
  2. Structural Insurance Period: normally automatically starts straight after the defects insurance period and maintains structural defect cover for either 10 or 12 years after your home is built. This means you are protected against major damage as a result of a defect in the design, workmanship or materials used. The warranty may also cover you should water get into your home because of a failure of the home’s waterproofing, but always check your policy for details.

Any claim you need to make against your structural warranty will be checked to ensure it is valid and covered under the terms of your policy. The good news is that it does not seek to apportion blame or negligence, only proof that major damage has occurred as a result of a defect in the design, workmanship or materials used in your home.

Often there are further benefits of warranty cover. In the case of a valid claim under a policy, the underwriter may pay:

As with any insurance policy, structural warranties have exclusions and excesses to pay, and there will be indemnity, of maximum values the insurer is willing to pay out. These will vary from policy to policy, but again your builder or developer should provide you with this information.

A structural warranty is not:

A structural warranty is not the same as building and contents insurance. Building insurance protects you in the event of accidental damage or damage caused by negligence, in other words, that is not the result of a defect. Contents insurance covers the contents of your home. Do not make the mistake of thinking you don’t need these insurances because you have a new home with structural warranty cover.

Self-builders or custom-builders may also be offered a Professional Consultant’s Certificate (PCC), also known as an architect’s certificate. Be aware that a PCC is not the same as a warranty, as it makes the consultant on your project (such as an architect) liable for defects but puts the onus on you to prove it. A typical PCC also excludes many of the cover types listed above, such as covering additional fees. For these projects, specific self-build structural warranties are available and cover may differ from new home warranties.

With luck, you will never need it

A structural warranty is there if you need it and with a good quality home, that may never be the case. Yet if something should go wrong, you have the peace of mind that there is an insurance policy that will put things right and not leave you out of home or pocket.