Homeowners

Buying a home is pretty much the most significant transaction for the great majority of our lives.

Building defects insurance – more commonly known as a “new home warranty” – is often part of the deal when you buy a new property. This means most people don’t think about it. But we think you should be aware of some basic information, at least.

What is “buildings defects insurance”? What is “buildings defects insurance”? 
 

	It does what it says on the tin. It is an insurance policy that protects against defects in the property that were not spotted during construction. The “insurance” word is important: it means the property owner has a binding contract with an insurer. The insurer assumes the risk that such defects will come to light at some point in the future, and agrees to compensate you if such risks occur. It's not unlike motor or travel insurance.   But, it differs from buildings and/or contents insurance, which responds to external causes of damage to the property or its contents. Buildings defects insurance responds to defects that are within, or “inherent” in the property.

How does it differ from New Home Warranties? How does it differ from New Home Warranties? 
 

	A basic “new home warranty” is a promise that your new home will be sold as stated and as legally required (for example it complies with the UK Building Regulations) and comes with an obligation on the part of the seller that any departures from that standard will be fixed. It also comes with the assistance of the home warranty provider in ensuring that such probems are rectified.   Although similar to insurance, it’s not quite the same: insurance contracts confer a legal right to claim under the insurance policy directly against an insurer. In the case of the BLPSECURE and BLPSECUREPLUS products, that legal right is conferred from completion of the property or on first sale, and not from two years after those dates.

Why do you need protection? Why do you need protection? 
 

	There is no legal requirement for a new home to come with building defects insurance or a warranty when it is sold to you. However, if a homebuyer wants to rely on a mortgage or other loan finance to buy a property, the lender is likely to require that property to have this sort of protection. Nowadays, the majority of new homes do come with defects insurance or a warranty.