What is a Commercial Property Warranty?

Also known as Commercial Latent Defects Insurance, this type of warranty offers comprehensive financial protection for a range of commercial construction projects.

These policies ensure that commercial buildings can be safely sold, leased, or rented out, removing the risk of liability for the landlord if structural problems become apparent later.

Obtaining a Commercial Property Warranty can help you to secure funding and enhance the value of the completed building, protecting everyone contractually involved for 10-12 years.

What counts as a “Commercial Property”?

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.

The whole property will share facilities and maintenance agreements held by the landlord. 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/occupant will be responsible for 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 be assignable, meaning that they can be transferred to new landlords or tenants for the duration of the policy.

If requested, a Commercial Building Warranty may also cover contaminated land, and mechanical and electrical inherent defects (M&E) for up to 5 years. In some cases, policy extensions may 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:

  • Your developer rating (if you already have one)
  • Overview and plans of development (e.g. type and number of units)
  • Construction cost calculations
  • Estimated total sales price of the property

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.

Why choose us for a Commercial Construction Warranty?

At ABC+ Warranty & Architects Certificate, 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 that 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.

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 the Council of Mortgage Lenders (CML). Simply get in touch if you need more information.

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What does a Commercial Property Warranty do?

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.

Who is a Commercial Property Warranty for?

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.

How much does a 10-Year Warranty cost?

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.

How is a Commercial Property Warranty different from building insurance?

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.

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