Some providers have exited the market, while others had to hit pause on writing new business until they could arrange new capacity facilities. This has left developers with a short panel of insurers to choose from.

These difficulties mean it is harder than ever for developers to know where to go and what to look for in a 10-year structural warranty insurance provider. As the policy remains in place for a 10-year term and acts not only as a key piece of protection, but also enablement, it's vital developers select the right insurance partner.

At J3 Advisory, our role is to remove the noise and opinion that surrounds insurance and funding, and deliver applied facts so our developers have the peace of mind that they have been suitably advised.

Limit of indemnity

As insurers continue to find it difficult to secure new capacity, there’s a common trend in the market where underwriters cap the level of indemnity per structure to £25m. This has left many SME developers vastly underinsured.

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Even on smaller projects, developers should always confirm in writing that the reinstatement cost and the limit of indemnity on the policy are complementary of one another. It’s alarming how often an attractively priced ‘alternative quote’ leaves the developer grossly underinsured. It's imperative that developers obtain insurance on a full-value basis.

The best course of action for developers is working with a FCA-regulated advisory firm. As a regulated advisory, it’s J3’s duty to make sure property developers’ partner with an insurer that works on a full construction-value basis.

To provide advice, firms need to truly understand the developer’s goals. A good adviser can then offer objective guidance, finding them the most suitable cover for their business.

They should also have access to all A-rated insurance providers across the market and deliver a comprehensive comparison, enabling developers to make decisions confidently and swiftly.

By working with an expert firm, developers can focus on building while the adviser finds the ideal insurance.

The limit of indemnity is the first in a series of articles J3 Advisory is authoring on the subject of structural warranties. Part two will cover A-rated capacity, expected in the next two weeks.