What is a Commercial Property Warranty?
Also known as Commercial Latent Defects Insurance, this type of building warranty offers comprehensive financial protection for a range of commercial construction projects.
These policies ensure that commercial buildings are legally safe to sell, lease, or rent 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 for your construction project and enhance the value of the completed building, protecting everyone contractually involved for a least 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 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:
- 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.
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.
Why choose ABC+ for your Commercial Warranty?
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).
Simply get in touch with our Commercial Property Warranty providers if you need more information.