What is a latent defect?
Damage to real estate property or a building project that is not visible upon the first inspection and is found when the property or project is passed over to new owners is known as a latent defect.
What is a latent defect in Insurance?
It is a first-party policy that is commonly used for commercial real estate and new construction, such as housing, retail, and offices. It can also be used for new construction on older or existing buildings.
It mostly addresses structural damage that was not visible at the time of construction’s completion. Policies are generally valid for 10 to 12 years, although they can be extended if necessary.
This insurance is also fully transferable over the policy’s lifespan. That implies that if the building is sold or re-let, all subsequent owners will be protected for the duration of the policy.
The insurance should cover any costs associated with correcting or repairing the flaw or difficulties without the need to assign blame or establish who was at fault. This is especially useful when many parties are engaged, such as an architect, project manager, contractor, and subcontractor, making it difficult to determine who is to blame – if anybody is – especially after several years have gone by. This may save a lot of time and legal fighting, and it simplifies and speeds up the whole claim process. Even if the culpable party has fallen bankrupt, a latent defects policy will payout.