Insurance options in light of a hardening Professional Indemnity market
The Professional Indemnity insurance market has been in need of a premium correction for a few years. Whilst Grenfell raised issues surrounding cladding exposures which has impacted the construction sector, the market itself has seen a drastic reduction in the number of insurers offering cover, be they composite insurers or Lloyds syndicates.
This has impacted the construction sector considerably. Prices have increased, insurer capacity has decreased, and the cover provided has moved from any one claim basis to aggregated cover, which not only impacts on existing contracts but also historical developments too, whereby any one claim cover was a contractual requirement.
Potential other options
Whilst not a direct replacement, Latent Defects insurance does offer a solution in terms of a first party policy to respond in the event of a structural defect that was not apparent at practical completion. Given the reduced level of cover offered by the PI market this alternative may at least satisfy the parties involved that enough insurance cover is in place should a structural issue arise with the development.
Does that mean I can get an LDI policy instead of PI?
No, Professional Indemnity insurance with a reputable insurer would still need to be purchased. Previously LDI for Commercial Developments may not have been considered and reliance would have been placed upon Collateral Warranties and Professional Indemnity insurance, but in an ever-changing market the One Guarantee warranty offering does provide developers and investors with other options.
One Guarantee LDI offering
One Guarantee have 8 specific warranty policies, New Home, Conversion, Mixed Use, Social, Private Rental, Commercial, Self-Build and Completed. The team here are more than happy to discuss any of these policies with you and how they could benefit you.