Latent Defects Insurance

Latent Defects Insurance (LDI), sometimes known as Decennial Liability Insurance (DLI) or by other names internationally, offers protection for particular defects that emerge during the construction process.

The Resilience Insurance LDI policy covers losses resulting from physical damage due to inherent defects, provided the claim is made within 10 years of the completion of the insured construction work.

An Inherent Defect refers to any fault or flaw in the structural components and/or the building envelope that arises from issues in design, materials, or workmanship, and which is only identified at the date of the Certificate of Practical Completion.

LDI generally provides coverage for inherent defects in:

• Waterproofing: Areas protected under the waterproofing extension of the cover.
• Structural Works: This includes all internal and external load-bearing structures critical to the stability or strength of the building.
• Envelope: This covers all elements of the external walls and roofing of the building.

LDI generally covers the costs associated with repairing, replacing, and reinforcing the insured structure if an inherent defect is identified and falls within the policy period.

Typically, the policy also provides coverage for the following, up to the specified limits:

• Reinstatement costs
• Interim housing expenses and waterproofing
• Debris removal
• Professional fees

Subject to the policy terms and conditions, including any extensions or endorsements, LDI Insurance typically excludes:

• Issues arising from a failure to repair or maintain, as well as normal wear and tear
• Non-structural works, equipment, fixtures, fittings, and external elements not integral to the building envelope

Residential Developments - Class 2 apartments of all sizes.

Commercial and Industrial Developments - Classes 3,4,5,6,7,8 & 9.

The average cost for the Resilience LDI product is 1.6% of the construction value (including GST).

LDI policies typically have a maximum standard limit of indemnity of $50 million, (higher values can be covered on application). The minimum limit of indemnity for Class 1 buildings is $2 million and $10 million for Class 2.

The information provided on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice on this website is General Advice and does not take into account any person’s individual investment objectives, financial situation or needs. Before making a decision based on this advice you should consider whether it is appropriate to your particular circumstances.

Where the General Advice relates to the acquisition or possible acquisition of a financial product, you should obtain a disclosure document, including the Product Disclosure Statement (PDS) and, where available, Target Market Determination (TMD) relating to the product and consider the content before making any decision about whether to acquire the product.

Authorised by Clearlake Insurance Brokers ABN 16 651 113 861 AFSL 559829