New Home Warranty – Your choice of Insurer is becoming ever more critical

row of four large terraced houses


Structural Warranty Insurance runs for 10 or 12 years whereas most insurance policies run for only 12 months.

Some key things to consider such as: –

  • What happens if your insurer becomes insolvent? If the Insurer goes bust then they won’t still be there to pay the claim.
  • What cover are you obtaining
  • What are the exclusions?
  • Does the policy cover the cost to fully rebuild the property or is there a lower limit?
  • Are key elements such as ‘ingress of water’ covered for the full policy period?

It is not always about price. Beware of the increasing number of providers who are offering very low premiums – there is usually a reason why they are cheaper.

Check the Insurers financial rating

The insurance cover you get is only as good as the insurer backing it. Insurance providers are reviewed and their financial strength is rated by four independent agencies—A.M. Best, Fitch, Moody’s and Standard & Poor’s—. It sounds obvious, but the better the financial rating of an insurer the more likely they are to be able to meet any claims. This is particularly important for a policy that lasts for 10 or 12 years such as our warranties.

For example, A M Best’s Financial Ratings range from A+ (Superior) to NR (Unrated). ‘A+’ and ‘A’ Rated companies have this rating as, in the opinion of the rating agency they have a superior or excellent ability to meet their ongoing and long-term insurance obligations.

If an insurer does not have a financial rating it is likely that there has not been an independent evaluation of their finances.

Remember, it is not all about Price, it’s about the amount of protection you get for that price. There are a number of well-established Warranty providers in the market who can provide ‘A’ rated security with competitive prices.

What happens if an insurer goes into administration?

A number of unrated insurers have gone bust over the past few years, just last year construction specialist Gable went into administration leaving 1,000’s of customers having to find alternative cover with a new Insurer, and pay a new premium too

Invariably one is told not to worry as they are covered under the Financial Services Compensation Service (FSCS). This is not necessarily true. If the claim is eligible for protection under the scheme the FSCS will only pay up to 90% of the claim. They do not provide cover for any company with a turnover over £1M. You could still have a substantial exposure and being a Creditor does not guarantee any payment.

If the claim is eligible for protection under the scheme it is unlikely to be settled quickly and may take several months.

Consider the following carefully

10 or 12 Year policies demand more close evaluation as the end result could be that you are left without a Warranty on your Development/Property if the Insurer goes bust and if you wish to sell the Property If the property is new or less than 10 years old any new Lender is likely to require a Warranty to be in place for the balance of the period. This means another Warranty will have to be obtained costing you time and money. –

The best way to make sure everything goes smoothly for your project is to plan it from the start to avoid unnecessary delays. Insurers have different requirements for you to obtain the warranty so make sure you are aware of what they are at the start. Most Insurers will want to carry out Technical Audit Services/Site Visits to fully assess the risk, so make sure you know when these visits are required as missing them could lead to your warranty provider refusing to issue cover.

You should consider your customers when choosing your warranty provider. The housebuilding industry is changing and there is more emphasis on protecting the homebuyer make sure the Warranty provider is a member of, or operating aChartered Trading Standards Institue (CTSi) approved ‘Consumer Code’ – showing that they are committed to driving up customer standards & raising overall consumer trust.

Why take the risk?!

The Build-Zone Warranties are underwritten by ‘A’ rated global Insurers & each case is subject to full technical review by Build-Zone Survey Services Limited with the aim of minimising any defects right from the design stage.

Build-Zone operates its own Chartered Trading Standards Institute fully approved Consumer Code which is mandatory for all builders with developments registered for the Build-Zone New Home Warranty.

New Development?

Contact Build-Zone today to arrange Structural Warranty or seek other Insurance advice on your next development. Contact our Sales team now on 0345 230 9873.

The author of this article is Ashleigh Poore, Director of Sennocke International Insurance Services who heads up our Build-Zone Warranty Division. If there are any new developments, you wish to discuss with him in person or if you have any other queries you can contact him at / or connect with him on Linkedin.