What is a Structural Warranty?

Posted by Protek Group Limited on 13th April 2023 -

A structural warranty is an insurance policy providing 10 year cover against major damage as a result of defects in the design, workmanship and materials of the structure or waterproof envelope. It may also provide cover for the below ground drainage and contaminated land. It may also cover failure to comply with building regulations. At first glance structural warranties may not appear particularly meaningful, but if you are building, extending or converting property - they are significantly important.

Structural warranties are very different to an Architects Certificate or professional consultant's certificate. These types of certification do not provide the same level of primary protection. In the event of a problem arising they require you to prove professional negligence. This can be a lengthy and expensive experience, which is why Structural Warranties are preferable to lenders.

Protek is a structural warranty provider. This means we can directly provide cover for many different types of development project.

Why do I need a structural warranty?

Defects in workmanship and design can occur during the construction process but do not immediately cause problems until after the property is complete. These defects can manifest several years later to cause damage, which is often very expensive to repair. Serious defects like foundation problems can take many years to become apparent, which is why a structural warranty policy lasts for 10 years.

Do I have to have a structural warranty?

Whilst there is no requirement by law to get a one for building work, but the majority of mortgage lenders won’t lend on a property without one. Clearly that could have major implications when trying to sell the property either for the first purchaser or any successor in title. So you risk delaying the sales process without one.

Who needs a structural warranty?

Whether you’re a homeowner or a developer, having a warranty in place is the best way to risk manage your investment. As the builder you may have responsibilities under the Defective Premises Act and this type of insurance helps mitigate that exposure, but the main reason that you should invest in a 10 year new home warranty is so that it is mortgageable.

Does a structural warranty cover structural damage?

Yes it does – usually as a result of defects in design, workmanship, materials and components that cause major damage for a period of ten years.

What else is covered?

The cover provided by a structural warranty varies by provider but can include:

• Defects insurance – leading providers of structural warranties include a defects period for the first two years of cover on their New Home Warranty policies. 
• Structural insurance – this makes up the main part of the warranty and covers against structural and defective weatherproofing issues after the defects period expires.
• Contaminated land – protects against the cost of removing contamination from the policyholders land
• Building Control cover - if elements of the house were not built in compliance with Building Regulations and are a hazard to the health of residents, this can cover the costs to put things right
• The cost of alternative accommodation whilst repairs are conducted
• Professional Fees
• Removal of building debris

When should I arrange a structural warranty?

If you are building or converting new homes its usually more cost effective to purchase a warranty prior to construction, as the structural warranty provider will need to inspect the construction works from the outset. If you do not and leave arranging the warranty until part way through construction it will cause problems and ultimately will cost considerably more to arrange.

How does the structural warranty work?

The process starts with a technical audit programme. Carried out during the course of construction, this process will check the design, workmanship and materials to ensure they meet the requirements of the insurer. Cover starts from completion and runs for a ten or twelve year period. In some instances the policy can also provide protection (new home warranty) for the purchasers deposit in the event the developer becomes insolvent prior to completion.

Why do you need a warranty?

There are several reasons why you should consider one. Most importantly perhaps is because most banks and building societies will not lend on a newly built property without one. So, if you are considering selling the property either from new or at some point down the line, you will need a structural warranty. In addition, you are purchasing a product which helps mitigate the cost of dealing with a major issue after purchase. Even the best builders cannot completely guarantee there will be no problems with their design, work or the materials used. 

How do you choose the right warranty?

There are now several warranty providers on the market, which can make it difficult to choose the correct one to work with. A structural warranty is an insurance policy, so it's really important to pick a provider that is backed by an 'A' Rated Insurance Company that is also fully authorised to underwrite business directly in the UK and is a member of the Financial Services Compensation Scheme. You also need to pick a warranty provider that has wide lender acceptance from UK Finance and The Building Societies Association members. Because lender acceptance is critically important in the sales process.

If you are building homes to sell, then you will need to be registered with a warranty provider that offers membership with The Consumer Code For New Homes or an alternative CTSI stage 2 approved scheme.

For more information on the cover we provide, check out our various structural warranty products or call the Protek team here on 0333 456 5040