Structural Warranties vs. Collateral Warranties Guide
One Guarantee arranges Structural Warranties for commercial developments covering the property for a period of up to 12 years. Our warranties provide financial security and peace of mind should any construction defects come to light. Collateral Warranties provides the beneficiary with a direct contractual relationship with the potentially negligent party, providing they have agreed to the implications of the Collateral Warranty. With this said, the differences between Collateral and Structural Warranties are quite significant.
| Differences | Structural Warranties | Collateral Warranties |
|---|---|---|
| Negligence | Provided that the defect constitutes a valid claim under the policy, Structural Warranties will pay out regardless of who’s at fault. | Collateral Warranties require negligence of the liable third party to be proven in a court of law – this can often be a difficult, lengthy and very costly process. |
| Insolvency | Under a Structural Warranty, insolvency is not an issue and the insurer will meet any rectification costs regardless of the responsible party’s solvency and ability to rectify the defect. | In the scenario the liable party goes into forced or voluntary insolvency following practical completion, any rectification costs will need to be met by the owner. |
| Professional Indemnity Insurance | Structural Warranties do not require Professional Indemnity insurance to be in place. If the structural defect is covered under the policy, the policy will respond. | Adequate limits of Professional Indemnity (PI) insurance needs to be maintained. Not only is PI insurance invalid in the event of insolvency, cover will also seize if PI is not renewed. |
| Assignability | Structural Warranties are fully assignable for an unlimited number of times throughout the lifetime of the policy. | Generally Collateral Warranties restrict the owner’s ability to assign the warranty meaning that it will not automatically be transferred to the new owner. |
To find out more about One Guarantee’s comprehensive Structural Warranties, talk to a member of our team on 01603 218288 today.