Guide
Latent defects, contract works, professional indemnity: which is which
Updated
Developers frequently believe they are covered for something that sits in the gap between two policies. These four are the ones that get confused, and knowing where each stops is more useful than any of them individually.
Contract works: during the build
Covers physical damage to the works and materials while construction is under way: fire, flood, storm, theft. It ends at practical completion.
It does not cover a defect. If a wall is built badly, contract works responds to the wall being destroyed by fire, not to the wall being wrong.
Latent defects: after completion
Covers damage arising from defects in the structure that could not reasonably have been discovered at completion, typically for 10 to 12 years afterwards. It is a property policy rather than a liability one, which is the important distinction.
That means a claim does not require you to prove somebody was negligent. You claim on your own policy for the damage, and that is precisely why lenders and purchasers value it over a right to sue somebody.
Professional indemnity: the designers
Covers the professionals for their own negligent design or advice, and it is theirs rather than yours. Recovering under it means establishing negligence and pursuing the firm, which requires that firm still to exist and still to be insured a decade later.
That dependency is the reason latent defects cover exists as a separate product. Design teams dissolve; policies lapse.
The gaps between them
Two recur. Between practical completion and the start of buildings insurance, where a finished, empty building can sit uninsured for perils. And workmanship defects that cause no damage, which many latent defects policies do not cover: the policy responds to damage arising from a defect rather than to the defect itself.
Ask specifically whether cover requires physical damage, because it usually does, and that single question explains most disappointed claims in this class.