What is Decennial Liability Cover

Tionge Simbeye Chief Underwriting

Decennial liability cover is a form of insurance commonly used in the construction industry. It protects contractors, architects, and engineers against any damages or defects that may arise in a building or structure they have designed or constructed within ten years of its completion. 

The cover, also known as 10-year or structural warranty insurance, is essential to ensure that both the contractor and the client are protected against any potential issues that may arise in future.

In most countries where decennial liability cover is mandatory, it is required for all public projects and is becoming more common in the private sector. Cover may include any defects or issues that affect the building or structure’s stability, safety, or functionality.

Examples of defects that may be covered by decennial liability insurance include foundation or structural issues, water penetration, and other issues that may affect the overall integrity of the building or structure. In some cases, defects may not be immediately apparent and may only become apparent over time.

Decennial liability cover is essential for contractors and builders as it protects against any claims that may arise from clients or owners of the building or structure. In the event of a claim, the insurance company will cover the costs of any necessary repairs or replacement work required to rectify the issue.

It is important to note that the decennial liability cover does not cover any defects or issues arising from poor maintenance or neglect. The owner or client is responsible for maintaining the building or structure to ensure that any potential issues are addressed promptly.

The cover is usually quoted or offered by specialist (re) insurance companies with experience in the construction industry. Choosing a reputable and experienced (re) insurance provider ensures that the policy covers all potential issues and that any claims are handled promptly and efficiently.

Decennial liability involves all parties taking part in the construction project of the structure (design, construction, sub-contractors). This is on strict liability basis. Therefore there is no need for errors & omissions to be proven/shown. In some countries, this cover is a “must or law” and is imposed on builders for 10 years from the acceptance date of the structure. So, if structural failure is not resultant of Acts of God or natural disaster, then the claim attaches.

Inherent Defect Insurance (IDI) is a specially designed liability cover for damages resulting from hidden or inherent defects (latent effects). It must be qualified by tracing the damages resulting from the defects or design flaws. The causes of inherent defects are numerous and can be attributed to many factors, including deficiencies in design and construction, defective material and workmanship, and problems associated with foundations or unforeseen ground conditions. Defects must be only discovered after the practical completion of the structure and not known prior to the time of handover certification of the project. The cover period can also go up to 10 years.

Decennial liability cover is a critical form of insurance for contractors, builders, architects, and engineers. It protects against any potential defects or issues arising in a building or structure within ten years of its completion. It is critical to choose a reputable and experienced (re)insurer to ensure that the policy covers all potential issues and that any claims are handled promptly and efficiently.

Tionge Simbeye

Chief Underwriting Officer

Klapton Re