Latent defects insurance have been around in one form or another for many years and are often referred to as: new home warranties / structural defects insurance / inherent defects insurance. Despite the various names these are insurance policies designed to offer protection for certain defined failures of a building such as structure movement or moisture ingress through the building envelope.
In the 1930’s there was major Government concern about poor house building standards that were the result of slum clearance programmes and the inter-war housing boom. However, limited availability of manpower and skills, financial pressures and incompetence led to poor building practices. In order to avoid legislation, the building industry created an organisation called the National House Builders Registration Council (NHBRC) in 1936.
NHBRC developed a set of building standards and carried out assessments of the work by their members to help ensure compliance with these standards. Over time a two-year warranty by the builder was administered by the NHBRC and in 1965 this evolved in to the ten-year Buildmark warranty which is more common today.
In 1973 the organisation was renamed National House-Building Council (NHBC) and in 1978 it became an insurance company to deliver the Buildmark Warranty itself. A decade later the current format of the Buildmark warranty was launched.
In 1985 the Government introduced legislation that allowed private sector Approved Inspectors (AI) to monitor compliance with Building Regulations. The NHBC was the only AI permitted to provide Building Control services for new homes.
In 1989 Local Authority Building Control (LABC) looked to launch a ten year warranty to help them compete with the NHBC’s move in to the Building Control market. LABC approached the Local Government insurer, Municipal Mutual Insurance (MMI), and a new era in structural home warranties was born. Foundation 15, a fifteen year warranty was launched by MMI. This was the first competition to NHBC’s provision of new home warranties.
1993 saw Zurich, one of the world’s largest and most respected insurers, buy MMI’s assets and re-branded and launched its own range of ten year warranties. Zurich innovated with different types of warranty policy for the private sector, the public sector, commercial developments and self-build projects. Cover provided became more flexible with optional additional clauses and 12 year policies where social housing building contracts were under seal. The NHBC responded with its own 12 year policy for social housing projects called Buildmark Choice.
In the early 1990s a new warranty provider joined the market place called Housing Associations Property Mutual (HAPM) offering a warranty purely for social housing projects but with cover which varied in length depending on the element of the building being insured. The load bearing structure could now be insured for up to 35 years. The continual pressure on cost reduction in the social housing sector meant that 35 year cover was no longer affordable and the warranty market was back to the original ten and twelve years offered by NHBC and Zurich, Building Guarantee. HAPM left the market altogether within a few years.
In 1997 an insurance broker called MD Insurance Services launched a brand called Premier Guarantee (PG) to offer a ten year structural warranty in substantially similar format to that of NHBC and Zurich. Premier Guarantee continue to offer their Buildmark look alike new home warranty policy.
During 1999 BLP (Building Life Plans) launched their own ten year insurance policies for new homes although they do not always offer the same type of cover as other new home warranties available with lower sums insured and restrictions on water penetration cover. BLP announced its withdrawal from the residential market in November 2019.
Zurich shocked the industry in 2009 with its announcement to exit the market completely and it closed its doors to new business at the end of September that year.
The spring of 2010 heralded the launch of Checkmate, a new and innovative latent defects insurance provider whose founding team have many years’ experience in the latent defects and new home warranty sector. A new online platform was launched to enhance service delivery and to make a significant step forward in risk management, defect detection and defect avoidance. Checkmate continues to lead the way with ongoing innovations in policy cover and service delivery. Among many industry “Firsts” Checkmate has been the first to deliver the following to the new home warranty market: