Latent defects insurance (LDI) has become a mainstream product
in the new build housing and commercial property market, with all
major residential mortgage providers and some commercial funders
requiring an approved form of LDI to be put in place by the
developer or the builder for security against latent defects.
It is becoming increasingly common for LDI to be pushed by
developers in lieu of more traditional forms of security, such as
12 year contractual liability for latent defects and a full suite
of collateral warranties from the supply chain.
The potential issue with LDI is that it is a separate
'product' in the form of a contract for insurance, subject
to its own policy terms and conditions, that sits outside the
contract a purchaser may have with its developer or builder.
Therefore any potential claim under the LDI policy is subject to
the standard terms of the specific insurer, including any
limitations of cover. This has been raised in a recent case
