Latent Defects Insurance
- Latent Defects Insurance (LDI) is now available in Australia and has been operating for 70 years in over 40 countries! Resilience Insurance is the first specialist insurance provider to offer LDI in the market.
- SHC is only 1 of 3 qualified distributors of LDI Nationally and has played a significant role in spearheading efforts to onshore the solution.
- LDI provides a 10-year insurance policy for a building against significant structural defects including waterproofing.
- The policy is obtained by the developer preconstruction and is handed over to the Owners Corporation at time of completion.
- LDI is providing significant peace of mind to consumers when purchasing property. Financial protection for 10 years post completion and assurance knowing your property has no significant defects at time of completion thanks to the Technical Inspection Services (TIS) program of work.
- In order to obtain LDI, it is a mandatory requirement for businesses to participate in the TIS which are independent, third party, onsite monitoring and reviews during the end to end construction phase.
SHC Latent Defects Insurance
Here's Why You Need Insurance
Latent Defects Insurance (LDI) is a first resort policy that covers physical loss or damage to a completed building caused by defects in design, materials or workmanship in the building’s structural (load-bearing) elements and envelope where such defects were not discovered at practical completion. First resort means the trigger for the claim is the manifestation of the defect itself and can be claimed by the property owner directly with the Insurer for any losses covered by the policy.
The cost of repairing water ingress as a result of defects in the waterproofing envelope is also covered after the expiry of the contractor’s defects liability period (usually 12 months- that is a 12-month waiting period or excess).
The cost for Accommodation Expenses incurred as a result of having to vacate the building due to it being either unsafe and/or repaired can be added to the policy.
Latent Defects Insurance covers the property owner for a period of 10 years from the date of Occupancy Certificate. It is applied by the Developer and/or Builder prior to starting construction and provides the longest coverage for Latent Defects in Australia.
Please contact our Experts now on 1300 550 665, or Richard Durnell (LDI Executive) on 0403 697 793.
Contact SHC Experts Now
Case Study - Opal Towers Sydney
Insure yourself out of the financial cost presented by Opal Towers, Sydney.
Excerpts from The Urban Developer Jan 21, 2019
"The newly-built 36-storey Sydney apartment building was evacuated on Christmas Eve after cracking in precast concrete panels was discovered on level 10, sparking fears that the tower could collapse. More than 300 apartment owners and residents face further months of uncertainty while others have been allowed to return to the building."
The saga has sparked widespread concerns about the quality of new developments and the approvals process behind high-rise apartment complexes in Sydney and across Australia.
Many commentators have highlighted a “systemic” problem rife throughout the industry and have blamed Opal Tower's failings as the result of the privatisation of building certification. Poor building practices continue to undermine confidence in the multi-billion-dollar construction industry, the strata management industry and in the planning system.
Engineers agreed the building was “structurally sound” but that “significant rectification works” were required to repair the building - to read the article in the Urban Developer
In the four months since the mass-evacuation, the Developer has spent more than $10 million reimbursing residents for accommodation and living expenses since December 31, according to the Developer’s spokeswoman.
Frequently Asked Questions
Resilience is a specialist underwriting agency in the insurance market, delivering focused insurance solutions in the Construction and Property sector. Global Reinsurers fronted by APRA-approved insurers enable Resilience Insurance to offer exclusive products to their Australian Broking network. Resilience is the first insurance entity in Australia to offer Latent Defects Insurance.
SHC, along with their Insurance partner, Resilience Insurance, has introduced the first Latent Defects Insurance (LDI) product into Australia. This product has been developed as a result of our experience in the UK and European Latent Defects Insurance markets where is it a commonly purchased for protection against Defects in completed construction projects.
Latent Defects Insurance (LDI), also known as Decennial Liability Insurance (DLI), protects residential apartments in the event that the building contains structural defects.
Resilience Insurance LDI provides cover against loss from physical damage, arising out of an Inherent Defect, within 10 years of completion of work.
An inherent defect is a reference to:
• Structural works include all internal and external load-bearing structures essential to the stability or strength of the building.
• The envelope includes all works forming part of the external walls and roofing of the building.
LDI cover the cost of repairing, replacing and strengthening the insured building following and consequent upon an inherent defect that becomes manifest during the period of insurance. It also includes the temporary accommodation expenses and cover for waterproofing.
In addition to the standard cover, we’ll provide the cover upto the policy limit:
• Removal of debris
• Professional fees
• Reinstatements cost
The LDI cover generally excludes:
• Non-structural works, equipment, fixtures and fittings and external works not integral to the building envelope
• Maintenance and mitigation
• Water ingress
Owners of the building including the Owners Corporation or Strata Scheme will be covered under an LDI policy.
The LDI policy will start when the insurer is satisfied with the conditions have been met.
It isn’t a legal requirement.
The maximum limit of indemnity of the LDI cover is $50M. The minimum limit of indemnity for Class 1 buildings is $2M and Class 2 buildings is $10M.
LDI is one of the options that can be replaced the SSBIS. SSBIS is run by the NSW Fair Trading as a last resort and LDI is a private insurance product as a first resort cover, providing for a maximum amount of cover of $50M.
The LDI can be purchased by any stakeholders involved in the new building work and is subject to the underwriting process.
Excesses are applied based on the construction type and the value of work. An excess is applied against each claim. The level of excess varies depending on the project size and complexity and insured entities should check the policy schedule. The Independent Construction Industry Rating Tool (iCIRT) is a critical part of the underwriting process. iCIRT is an independent construction industry star-rating tool to assess building professionals. You can order a rating report from iCIRT Build Star-rating | Equifax (buildrating.com)
The best time to apply and arrange LDI cover is at the start of the work before construction work commences ideally before the Construction Certificate is issued.
The cover should be purchased prior to the commencement of works. The information required focuses on Builder and developer history (including ICIRT rating if available) , Design and engineering, water mitigation and fire protection as a guide, more detailed information and checklists are available once you have contacted our broker team below
Technical Inspection Service (TIS) is a performance control monitor to add a layer of quality assurance, which ensures the building is built to the appropriate standards and complies with design and engineering specifications, and the quality testing of construction material is adequate.
We provide a panel of acceptable qualified professionals for the TIS options and The company performing the TIS is paid directly by the entity that intends to purchase the LDI policy
Please contact our Broker team to discuss the next steps.
The cost to purchase the LDI policy will consist of a premium and TIS fees. Your premium will depend on your risk profile including a number of factors such as your cost of construction work, building specifications, iCIRT rating score, etc. The TIS fee will depend on the complexity of the building and the scales of inspections. The total cost of LDI is expected to be less than 2% of construction work cost.
Excesses are applied based on the construction type and the value of work. An excess is applied against each claim. The level of excess varies depending on the project size and complexity.
Claims can be made during the period of insurance at the time that an insured event occurs.
We issue the product nationally, but legislation differs across states and territories. Please contact our Broker team for further details.
You can cancel the policy anytime and you will get a pro-rata’d return of the premium after the policy begins. Some fees are not refundable if the policy is not enacted.
