Matthew Blackhall, senior advisor at insurance and debt specialist J3 Advisory, gave an essential overview with a handy checklist for securing *warranties for buildings that are complete, partially complete or in receivership.
 
 
Retrospective Warranty
Also known as a completed home warranty, a retrospective warranty specifically covers completed units that have not benefited from regular inspections related to a structural warranty. While it is not a legal requirement, all mortgage companies will require this warranty to be in place to facilitate sales.
The cost of these warranties can be higher as completed or part-completed properties are often perceived to pose greater risk as the insurer has limited opportunity to oversee key phases of the build. It is recommended to budget roughly 2.5% of the reinstatement cost for a retrospective warranty.
Warranty checklist

1. Limits of indemnity
2. A-rated provider
3. Access to lending market
4. Competent, compliant technical services
5. Demonstrable experience
6. Excesses
7. Check Rating Agencies
8. FSCS Covered
9. UK-licensed
10. Who is covered
11. Common parts / Splitting blocks

Documentation needed to secure a quotation for part-complete and receivership schemes:

• Schedule of accommodation
• Structural drawings and detailing
• Architectural plans
• Design and access statement
• List of sub-contractors and works packages
• Building control reports
• Insurer inspection reports
• Clerk of works reports

Key considerations:

• Policy beneficiaries
• Liability period
• Stage of development
• Quality of work
• Experience of developer/ professional team
• Availability of building control reports
• Previous insurer inspection reports
• Location and size of the scheme

Professional Consultant Certificate (Architect Certificate) VS Building Warranties?
 
There are some scenarios where PCCs – which last for six years as opposed to 10 for building warranties – are suitable. However, the advice of J3 is always to seek a warranty that is backed by A-rated capacity. Failing that, consider a Professional Consultant Certificate, with the caveat you gain agreement from the lender and, if possible, the mortgage provider from your would-be purchasers.
Are you paying too much?
Matthew added that property professionals often overpay for their warranties because they rely only on their current provider, don’t present their project risk adequately or because they approach insurers that do not have adequate capacity or suitable appetite for risk. He shared a link to J3 Advisory’s useful Building Warranty Cost Calculator.
 
*Other terms for “building warranty” include latent defects insurance, inherent defect insurance, structural warranties, new home warranties and collateral damage insurance.