Defects Liability Insurance (often described as post-completion cover) is designed to protect construction clients, developers, principal contractors, and sometimes funders against the cost of putting right certain defects that show up after practical completion. It sits in a family of “latent defects” protections, but it’s important to be clear: the market uses similar terms for products that can work quite differently.
In this guide, we’ll break down what defects liability insurance is, what it typically covers, how it differs from a contractual defects liability period, and how to choose the right post-completion protection for your project.
Defects Liability Insurance is a policy intended to respond when defects in design, materials, or workmanship are discovered after the project is completed and handed over.
In plain English: it’s there for the “we finished the job, but something isn’t right” moment—when the defect is real, the cost to fix it is significant, and you need a clear route to fund remedial works.
Depending on the wording, it may cover:
The cost of investigating and confirming the defect
The cost of rectifying the defect (materials and labour)
The cost of accessing the defective part (opening up)
The cost of reinstatement after access
Associated professional fees (engineers, surveyors, architects)
Some policies are closer to a “warranty” style product (often called latent defects insurance), while others are structured as an extension to a project policy or a specialist defects product for contractors.
Most construction contracts include a defects liability period (also called a defects rectification period). This is a contractual window—often 6, 12, or 24 months—during which the contractor must return to fix defects that become apparent.
That contractual obligation is not the same as insurance.
Here’s the difference:
Defects liability period (contract term): A promise from the contractor to fix defects.
Defects liability insurance (insurance policy): A financial backstop that can pay for remedial works if the policy responds.
Why this matters: if the contractor is insolvent, disputes liability, or the defect is expensive and complex, the contractual promise may not be enough. Insurance can help provide certainty—especially for developers selling units, funders requiring risk transfer, or clients operating critical facilities.
Defects discovered after completion can be disruptive and costly. They can also trigger knock-on losses:
Delays to occupation or handover
Tenant complaints and reputational damage
Safety risks (especially structural, fire, or building envelope issues)
Disputes between contractor, subcontractors, and designers
Expensive “opening up” and investigative works
Post-completion cover is most valuable when the project has:
Complex design interfaces (multiple trades, specialist systems)
High-value finishes or building envelope risks
Tight handover deadlines
A need to satisfy funder or purchaser requirements
A client that needs operational continuity (healthcare, manufacturing, retail)
Coverage varies heavily by insurer and product type, but many policies focus on physical damage and remedial costs arising from defects.
Depending on wording, a claim may be triggered by:
A defect that causes physical damage to insured property
A defect that creates an imminent danger of physical damage (some policies)
A defect discovered during the policy period that requires rectification
Rectification costs: Repairing or replacing defective work
Access and reinstatement: Opening up and making good
Professional fees: Engineers, surveyors, architects, testing
Debris removal: Where relevant
This depends on the structure:
Developer / building owner / employer (common for latent defects style cover)
Main contractor (some contractor-focused products)
Funders / purchasers (sometimes noted or included)
Always check whether the policy is assignable to future owners—this can be critical for developments that will be sold.
Exclusions are where most surprises happen. Common exclusions include:
Known defects or defects known at inception
Wear and tear, gradual deterioration, lack of maintenance
Consequential loss (loss of rent, loss of profit) unless specifically added
Aesthetic issues that do not affect performance
Defects in materials that are subject to manufacturer warranty only
Penalties, liquidated damages, contractual guarantees
Pollution/contamination (unless specifically covered)
Non-compliance with regulations where there is no physical damage (wording dependent)
Some policies also exclude:
Defects in design unless the design was reviewed/approved
Certain high-risk elements (cladding systems, basements, roofs) unless disclosed and underwritten
Works by unapproved subcontractors
The practical takeaway: you need to align the policy with the project’s highest-risk elements, not just buy a generic “post-completion” label.
In the UK market, “post-completion defects cover” is often discussed alongside latent defects insurance—sometimes called:
Structural warranty
Inherent defects insurance
Latent defects warranty
Latent defects insurance is typically purchased for a new build (or major refurbishment) and can provide long-term cover (often 10 or 12 years) for certain categories of defects—frequently focusing on structural elements and weatherproofing.
Defects liability insurance, depending on product, may be:
Shorter term (e.g., 12–24 months post-completion)
Broader in some respects (e.g., covering remedial costs without requiring major structural failure)
More tightly defined in others (e.g., requiring physical damage)
If you’re a developer selling units, a funder may specifically require a recognised structural warranty product. If you’re a contractor looking to manage post-completion exposure, you may be looking for a different solution.
Policy periods vary. Common structures include:
12 months post-completion (often aligned with the defects rectification period)
24 months post-completion (useful for complex MEP or envelope issues)
10–12 years (latent defects/structural warranty style)
The right term depends on:
Contract structure and handover arrangements
The nature of the build (e.g., basements, façades, complex services)
Whether the asset will be sold or refinanced
The client’s risk appetite and maintenance plan
If a defect is discovered after completion, the process usually looks like this:
Notify early: Most policies require prompt notification.
Evidence and investigation: Photos, reports, testing, and expert opinions are often needed.
Insurer assessment: The insurer will check the defect against insured triggers and exclusions.
Scope of works: A remedial plan and costings are agreed.
Settlement: The insurer may pay costs directly, reimburse, or fund works subject to conditions.
A common friction point is “opening up” costs. Some wordings cover opening up only if the defect is confirmed and covered; others provide limited investigation cover.
Because defects can be expensive and complex, underwriting is often detailed. Expect questions about:
Contract type (JCT, NEC, bespoke)
Project value, location, and programme
Contractor and subcontractor experience
Design responsibility (who designs what)
Quality management systems and supervision
Materials and methods (especially envelope, waterproofing, fire stopping)
Testing and commissioning plans
Any prior claims history
For latent defects/structural warranty style products, technical audit and site inspections are common.
Post-completion defects cover rarely stands alone. It often sits alongside:
Contract Works (CAR/EAR): Covers physical loss or damage during the build.
Public Liability: Covers third-party injury/property damage arising from the contractor’s operations.
Professional Indemnity: Covers negligence in design/advice, often on a claims-made basis.
Non-negligent liability (JCT 6.5.1 / 6.5.2): Covers certain damage to neighbouring property from specified perils.
Completed Operations (PL extension): Covers liability arising after completion.
Key point: a defect itself may not be covered under PL unless it causes third-party damage or injury. PI may respond to design negligence, but it’s claims-made and can be affected by retroactive dates, exclusions, and insolvency. Post-completion defects cover can be a more direct route to funding remedial works.
A newly completed commercial unit develops water ingress around curtain wall interfaces. Investigation shows inadequate sealing and missing cavity barriers in sections.
Potential costs:
Access (scaffolding, opening up)
Replacement of defective components
Making good internal finishes
Professional fees
A post-completion defects policy may respond if the wording covers rectification and access costs and the defect meets the insured trigger.
A building’s HVAC system fails to meet design performance after handover. The cause is a combination of incorrect balancing and undersized components.
Depending on policy type, cover may be limited if there is no physical damage, but some products can respond where remedial works are required due to defective workmanship.
Cracking appears in a structural element due to inadequate reinforcement placement.
A latent defects/structural warranty style policy may be the appropriate solution here, particularly if the defect affects structural integrity.
When you’re comparing post-completion defects cover, use this checklist.
Is the priority structural integrity over 10–12 years?
Or is it practical rectification costs in the first 12–24 months?
Is the driver a funder requirement, a sales requirement, or operational continuity?
Ask: does the policy require:
Physical damage?
Imminent danger?
A defect discovered during the period?
These costs can be significant. Clarify:
Is opening up covered?
Are investigation costs covered if the defect is not ultimately insured?
Are professional fees included or capped?
If your biggest risks are basements, roofs, cladding interfaces, or fire stopping, make sure the policy doesn’t quietly exclude them—or that they are properly declared and underwritten.
What is the excess per claim?
Is there an aggregate limit?
Are there sub-limits for investigation or access?
Can the owner claim directly?
Does the contractor need to be involved?
Is the policy assignable to future owners?
The insurer may expect:
A clear handover pack
O&M manuals
Planned maintenance
Evidence of quality control and inspections
Buying on name alone: “Defects liability” can mean different things.
Not disclosing high-risk elements: Non-disclosure can cause claim disputes.
Assuming it replaces PI: PI is about negligence claims; defects cover is about remedial works (depending on wording).
Ignoring the claims process: If investigation and opening up aren’t covered, you can still face big costs.
Misalignment with project stakeholders: Developers, contractors, and funders may each need different protections.
No. It’s typically optional unless required by a contract, funder, purchaser, or warranty provider. Some projects effectively treat it as mandatory because stakeholders require it for risk transfer.
Sometimes, but it depends on the insured trigger and wording. Many policies respond only when defects cause physical damage or require rectification under defined conditions.
Some products do, some don’t, and many require design review, technical audit, or specific disclosure. Design-related issues may also fall under Professional Indemnity.
Not always. Structural warranties (latent defects insurance) are typically long-term (often 10–12 years) and focused on structural and weatherproofing elements. “Post-completion defects cover” can be shorter term and structured differently.
Either, depending on the risk and contract structure. Developers and building owners often buy latent defects style cover. Contractors may buy products aimed at managing post-completion exposure.
Retention is money withheld under the contract to encourage defect rectification. Insurance is a separate risk transfer mechanism that can fund remedial works even if retention is insufficient or disputes arise.
Potentially, yes—this is one of the reasons clients and funders like post-completion cover. But you must check policy conditions, insured parties, and whether the policy responds regardless of contractor solvency.
Pricing depends on project value, complexity, location, build type, and underwriting requirements (including audits/inspections). High-risk elements and longer policy terms increase premium.
Defects discovered after completion can be one of the most expensive and disruptive risks in construction—especially when multiple parties are involved and responsibility is disputed. Defects Liability Insurance (post-completion cover) can provide a clearer route to funding remedial works, protecting cashflow, reputations, and project timelines.
If you’re planning a build, refinancing a completed asset, or selling units, it’s worth reviewing your post-completion risk strategy early—ideally before contracts are signed and long before handover.
Need help arranging construction insurance or post-completion defects cover? Speak to a specialist broker who understands contract structures, project risks, and how different policies respond in the real world.
Defects Liability Insurance (often described as post-completion cover) is designed to protect construction clients, developers, principal contractors, and sometimes funders ag…
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