Latent defects insurance (LDI) is commonly taken out by BTR operators to protect against defects in design, workmanship and materials. It also ensures mortgage lender requirements for a structural warranty are satisfied should operators wish to dispose of the asset to the open market.
Like the professional indemnity market for construction-related activities, the LDI market has seen plenty of challenges in the last couple of years, but there’s some good news. Premier Guarantee are introducing a new product which offers choice and innovation to the market: PRS Select.
BTR has changed over the years. By listening to feedback from funders and developers, it was clear that a new product was needed in addition to our existing PRS warranty product. PRS Select offers contractors, developers and operators options at both the beginning and during the period of cover.
A flexible product
A traditional residential structural warranty requires that the builder is tied into a defect insurance period, but with PRS Select that isn’t the case. And where a Tier 1 builder is involved, this makes a lot of sense.
PRS Select also allows much greater flexibility in terms of the excess applied which can translate into large reductions in premium. Whereas a traditional warranty is aimed at protecting individual leaseholders and therefore applies a small common parts excess, our new product will allow excesses up to £1m, depending on the size of the project.
And to add greater flexibility, if a future purchaser has a lower risk appetite for latent defects, the excess can be reduced at any point during the life of the policy. This does away with the need to pay for comprehensive level insurance up front just to cover off every possible scenario which may never materialise.
How PRS Select works
The following scenarios show the 3 possible outcomes provided by the flexible nature of PRS Select, should the original owner wish to dispose of all or some of the units (in the case of scenario 3). N.B. These changes are possible after year 2 of the policy. In all scenarios paying of additional premium allows for a reduction in relevant excesses and changes to certification.
What else can PRS Select offer?
To supplement the BTR structural cover we can provide additional cover for:
• mechanical and electrical defects
• loss of rent
• specific risk transfer for main contractor
Why work with Premier Guarantee?
Here are just a couple of reasons to work with Premier Guarantee on your next BTR project:
• We’re a trusted provider of cover
We are backed by a panel of ‘A’ rated insurers, which offers flexibility in securing you cover to suit your specific needs.
• We ensure the best people work with you
Years of experience working on innovative, high-value construction projects has enabled us to develop a specialised Major Projects Team to support you throughout the entire build. We will liaise with your project team right from design stage, offering you advice and guidance with access to a range of experts both in-house and external.