When do you need a Commercial Property Warranty?
You need a Commercial Property Warranty when you’re developing, purchasing, or investing in a new commercial building. It’s especially important if you want long-term protection against structural defects that standard insurance won’t cover.
Whether you’re planning to lease the property, occupy it yourself, or sell it in the future, this warranty provides peace of mind and safeguards your financial investment for up to 10–12 years after completion.
What do you need to know about a Commercial Property Warranty?
For this type of Structural Warranty to apply, the building must be used for commercial purposes, or contain a commercial unit. More often than not, retail or business premises are at ground level, with a residential element above or alongside them.
For this type of Structural Warranty to apply, the building must be used for commercial purposes, or contain a commercial unit. More often than not, retail or business premises are at ground level, with a residential element above or alongside them.
In either case, the whole property will share facilities and maintenance agreements held by the landlord or building owner. For the purpose of this policy, the commercial property is the entire building as described in the Pre-Completion and Post-Completion Certificates.
A commercial property will include the structure itself, all non-load-bearing elements, drainage systems, and any ancillary buildings installed during the construction project. The owner or occupant will be responsible for insuring the interior fixtures and fittings.
What does a Commercial Property Warranty cover?
The specifics of the policy will vary according to your individual contract, but there are several common key features of Commercial Property Structural Warranties.
Generally, these warranties will cover all contracted parties for partial or full reconstruction in the event that a structural element fails. They should also be assignable, meaning they can be transferred to any new landlords or tenants for the duration of the policy.
If the landlord requires further cover, a Commercial Building Warranty could be extended to include contaminated land and mechanical and electrical inherent defects (M&E) for up to 5 years. In some cases, policy extensions may also be available to cover loss of rent payable/receivable or loss of gross profit.
To apply for a Commercial Construction Warranty, you’ll need to provide information such as:
Without the relevant details about your commercial construction, no warranty provider will be able to issue a formal written quote for this type of insurance.
How would a Structural Warranty benefit my project?
Whether it’s an apartment building you intend to rent to tenants or hospitality or leisure facilities that you’ll be leasing to a business, a commercial development is sure to be a much bigger project than standard new build housing construction.
As it requires work from more third party contractors and larger volumes of materials, a commercial project will also require much greater financial investment. If you want to get more investors onside to finance the project, you’ll need to prove that their funds are protected if things go wrong.
Of course, you’ll want to protect any funding of your own that you’re investing in your commercial property, too. One of the insurance policies that you should have in place for this purpose is a Structural Warranty.
With a greater number and variety of structural elements involved, commercial developments also have greater potential for more structural risks. You’ll definitely want a Building Warranty with specialist cover that can reduce the risk of structural defects.
It can also contribute to repair and reconstruction costs in the event that latent structural defects are discovered in the future. After all, no developer or property owner wants to get tangled up in costly and time-consuming litigation procedures to establish liability and secure financial settlements.
Instead, the safety net of a Commercial Property Warranty will give you and your investors peace of mind for 2-10 years from its date of completion – and any future buyers, if you decide to sell the commercial property on during the warranty period.
At ABC+ Warranty, we are able to provide Commercial Property Warranties up to a rebuild value of £10 million. Our policies cover pre-completion, buyers’ deposit risk during works, post-completion, and both major structural damage risk and contamination risk.
Additionally, medium to large developments may require a Road Bond, which developers are obliged to provide in order to obtain Planning Approval. These bonds guarantee the access roads to the construction site will be completed to the appropriate standard.
Should you need them, we can also provide Road and Sewer Bonds alongside Commercial Building Warranties, providing the convenience of both documents in one place.
Take the stress out of searching for a warranty supplier and request a quick quote online. We offer honest quotes with no hidden fees, and our products are accepted by many approved lenders with UK Finance (formerly the Council of Mortgage Lenders/CML).
Why choose ABC+ for your Commercial Warranty?
Here at ABC+ Warranty, the answer is yes! We provide specialist Commercial Property Warranties to give owners and investors complete peace of mind.
This cover protects against structural damage or defects caused by poor workmanship or materials. When constructing or converting a commercial building, it’s essential to ensure it can withstand long-term use and demanding conditions. With the support of our robust Commercial Property Warranty, you’ll have the financial protection you need for years to come.
In the best-case scenario, your commercial property will remain free from structural issues, showing that the construction work has been carried out to a high standard. However, this isn’t always guaranteed. By securing a Commercial Property Warranty, you can protect your investment and avoid the financial burden of unexpected repair costs if something does go wrong.
All of our architects’ certificates and warranties comply with the UK Finance Lenders’ Handbook, and you can view our approved lender list here.
FAQ
Getting a quote from ABC+ Warranty is fairly easy. For a fast estimate, you can fill out our quick quote form with your basic information. However, you should bear in mind that this quote may be liable to change upon providing further specifics that could affect our risk assessment.
For a more accurate quotation, please either fill out our full online application form, or call the ABC+ Warranty team on 0161 928 8804. Our expert staff can go through the details with you to set up a Commercial Structural Warranty, and are happy to discuss the best options for your needs.
Should you have any initial enquiries or follow-up questions about Commercial Property Warranties or any of our other financial products, please give us a call on the number above, or send them by email to info@architectscertificate.co.uk. We always aim to make the process as efficient as we can.
As the developer and/or owner of a commercial property, this type of Latent Defects Insurance protects you financially against potential structural defects. Fixing structural failures can be costly, which is why it’s better to be safe than sorry and secure a Commercial Structural Warranty.
This insurance policy can take the place of a Collateral Warranty, simplifying the process for contractors. It covers the repair of structural defects or damage within the first 2 years, and pre-existing contamination or structural failures for the 10-12 years after completion.
However, it will not cover general wear and tear, weather or accidental damage, or neglect – including lack of maintenance and security. This applies to properties left unoccupied and unsecured, and instances of vandalism or theft where force wasn’t used to gain access.
A Commercial Property Warranty will offer protection for any type of building used for commercial purposes, taken out by the developer or owner of the property. This will allow them to make a financial compensation claim against the builders and architects in case of structural flaws.
If you’re wondering what counts as a commercial property, it can be any new-build, conversion, or mixed-use development that’s intended for business use. Sectors like retail, hospitality, education, and industrial manufacturing are just some of many that could benefit from this type of cover.
The most common projects where a Commercial Building Warranty is used include:
- Office blocks
- Shops or supermarkets
- Restaurants or pubs
- Hotels or leisure facilities
- Schools or universities
- Private healthcare
- Warehouses
- Industrial estates
From sports centres to student accommodation, cafés to care homes, there are many types of commercial properties that require tailored Structural Warranties. Without this guarantee of protection, it can be difficult to secure financial investment for commercial construction projects.
The cost of a Commercial Property Warranty will depend on factors such as your developer rating, financial status, and the size or sale price of the business development. Your specific quote will be calculated after sharing the plans and technical specifications of your proposed project.
Commercial Construction Warranty providers will usually need to conduct an inspection and a credit check to identify any potential issues with your commercial project. The results will influence the final quote that you will receive and which terms are written into the formal contract.
If you have an existing Commercial Building Warranty but want to carry out refurbishment or conversion works within the period of cover, structural changes can invalidate this first warranty. You may need to update and renew with a new quote, or take out an entirely new policy.
As homeowners are required to have home insurance in order to get a mortgage, so are commercial property owners required to have building insurance to secure financial funding. This is not the same thing as a 10-12 Year Structural Warranty, as it covers different types of damage.
While a Commercial Building Warranty offers financial protection pertaining to the structure itself and the land it’s built on, building insurance policies pay out for repairs or replacements for a wider variety of elements in a larger range of circumstances. Even if you already have a Commercial Structural Warranty, you’ll want building insurance as well for the extended protection.
For example, building insurance covers damage from things like fires, floods, severe weather, accidental damage, and theft (which the policy owner isn’t responsible for) – and a Commercial Construction Warranty doesn’t. There’s also contents insurance, which covers equipment, furnishings, and other such interior elements that aren’t included in a Structural Warranty.
If you don’t use the premises for your own business, but lease the commercial property to someone else, then that company will be responsible for their own building insurance and contents insurance.
As anyone involved with construction contracts will know, a Structural Warranty is not the same and does not cover the same conditions as Contractors’ All-Risk Insurance. While a developer may take out a Structural Warranty at the start to later transfer it to the property buyer, the developer or contractor must also have their own CAR insurance in case of unexpected damage or theft.
A Commercial Property Warranty will only cover the correction of structural defects, which the property owner can claim for, and the contractor must also claim for under their own Professional Liability Insurance if they have to pay for repair work. Neither of these insurance policies apply in the event of damage or theft of property or public injury on the building site during construction.
This is why you should have both Contractors’ All-Risk Insurance and a Commercial Property Warranty in place from the start, covering all bases rather than leaving some areas vulnerable.
While they are a popular option for protecting commercial properties, there are far more limitations on a Collateral Warranty. These warranties are a legal arrangement extending an existing contract to include specified third parties, who will then have a direct method of legal recourse if they need to make a third party claim for latent structural defects.
A Structural Warranty on its own tends to be set up by the developer and transferred to the buyer. Any tenant would then have to go through the landlord to address a structural defect. On the other hand, a Collateral Warranty could extend the Structural Warranty contract to include leaseholders as well as the developer and the buyer/property owner.
A Commercial Property Warranty is essentially a first-party policy that can be transferred between parties and invoked without the requirement of proving negligence or liability. It’s the better option for a commercial development project, though you can set up a Collateral Warranty as an addition if you wish – it’s just not advisable on its own without a Structural Warranty.
