FAQ
Performance Bonds
What is a performance bond?
A performance bond is a financial guarantee provided by a bank or insurance company to ensure that a contractor completes a project according to the agreed terms. If the contractor fails to meet their obligations, the bond compensates the project owner for any resulting losses.
When is a performance bond required?
Performance bonds are typically required in construction projects to protect clients against the risk of contractor default. They are common in both public and private sector contracts, especially for large-scale or high-value projects.
How much does a performance bond cost?
The cost of a performance bond varies based on factors such as the project size, duration, and the contractor’s financial standing.
Insurance Backed Guarantees
What is an insurance-backed guarantee (IBG)?
An IBG is an insurance policy that protects homeowners if their contractor ceases trading and is unable to honour their workmanship guarantee. It ensures that any defects covered under the original guarantee are still addressed.
How do I obtain an IBG?
Typically, the contractor arranges the IBG upon completion of the work. Homeowners should request this from their contractor, who will coordinate with the insurance provider to issue the policy.
What does an IBG cover?
An IBG covers defects in workmanship and materials as specified in the original contractor’s guarantee. It becomes effective if the contractor is no longer trading and cannot fulfil their obligations.
Can I purchase an IBG directly as a homeowner?
IBGs are typically arranged by the contractor who performed the work. Homeowners should ensure their contractor provides this guarantee upon project completion.
Structural Warranty
What is a structural warranty?
A structural warranty is a 10/12-year insurance policy that protects homeowners against defects in the design, workmanship, or materials of a new build or conversion. It covers the cost of rectifying structural issues that arise after construction is completed.
Is a structural warranty mandatory?
While not legally required, most mortgage lenders in the UK insist on a structural warranty for new builds or conversions. It provides assurance that the property is structurally sound and that any defects will be addressed.
When should I arrange a structural warranty?
It’s advisable to arrange a structural warranty before construction begins. Early involvement ensures that inspections and assessments are conducted throughout the build, facilitating smoother certification upon completion.
What does a structural warranty cover?
It covers major structural elements of the property, including foundations and load-bearing walls. Some policies also include coverage for drainage systems and waterproofing.
What is not covered by a structural warranty?
Structural warranties typically exclude defects known before the policy starts, damage due to poor maintenance, normal wear and tear, and issues arising from non-approved alterations.