Insurance Backed Guarantees (IBG)
Strengthen your long-term asset protection.
Insurance Backed Guarantees Explained
An Insurance Backed Guarantee (IBG) is a specialised policy that underwrites the original installer’s written warranty.
For Housing Associations and developers, an IBG is a critical layer of financial security. Unlike a standard contractor warranty, which becomes worthless if the company enters insolvency, an IBG transfers the liability to an A-Rated insurer. This ensures that valid claims for defective workmanship – on assets ranging from roofing and glazing to external wall insulation – are rectified at no additional cost to the asset owner, typically for a period of 10 years from completion.
What Does an IBG Actually Cover?
An IBG is a “Policy of Last Resort”. It does not replace the contractor’s primary obligation to fix defects while they are still in business. Instead, it acts as a dormant safety net that only triggers under specific conditions.
The policy mirrors the terms of the original written guarantee provided by the installer. If the original guarantee covered materials and labor for 10 years, the IBG will cover the reasonable cost of rectifying works to that same standard if the contractor suffers an “Insured Event” – most commonly, insolvency or bankruptcy.
Core Coverage Scope:
Workmanship Defects
Errors in installation.
(e.g., a window that leaks due to poor fitting).
Material Failures
Breakdown of supplied goods.
(subject to manufacturer warranty alignment).
Rectification Costs
The insurer pays for an approved third-party contractor to fix the issue up to the original contract value.
Deposit Protection
(Optional but common)
Covers the loss of upfront deposits if the contractor goes bankrupt before work starts.
For larger projects where the contractor’s insolvency during the build phase is a concern — not just post-completion — Insolvency Cover provides a complementary layer of protection.
Secure Protection for Your Next Project
Don't let contractor insolvency jeopardise your asset or funding compliance. Whether you are a Housing Association requiring specific grant-compliant wording (ECO4/SHDF) or a private developer needing mortgage-approved cover, our team accesses the whole of the UK market to secure A-Rated capacity. We provide rapid turnaround times on quotes, ensuring your paperwork is ready before you step on site.
Insolvency Cover vs. Insurance Backed Guarantees (IBGs)
While both policies protect you if a contractor goes out of business, they cover entirely different stages of your project’s lifecycle. The easiest way to tell them apart is to look at the timeline: Insolvency Cover protects the active build, while an IBG protects the finished result.
Here is a quick breakdown of how they compare:
| Insolvency Cover | Insurance Backed Guarantee (IBG) | |
|---|---|---|
| When it protects you | During the construction phase. | After the project is completed. |
| What triggers a claim? | The contractor ceases trading before the job is finished. | A fault appears in the finished work, but the original contractor has ceased trading and cannot honor their written warranty. |
| What does it pay for? | Protecting your lost deposit and covering the extra costs to hire a new builder to finish the site. | Hiring a new tradesperson to repair or replace the defective workmanship or faulty materials. |
| The ultimate benefit | Ensuring the project actually gets built. | Giving you long-term peace of mind in your finished space. |
For active build-phase protection during the construction period itself, see Contractors All Risk Insurance.
Common Use Cases for an Insurance Backed Guarantee
Important Distinction: An IBG is not a “comprehensive maintenance plan.” It does not cover wear and tear, storm damage, or issues caused by lack of maintenance (e.g., blocked gutters causing leaks).
It strictly mirrors the contractor’s original promise to fix their mistakes.
Roofing
Essential for 10-25 year flat roof warranties.
Timber
A standard mortgage lender requirement for older properties.
Renewables
Technologies that are MCS compliant such as Solar PV and Heat Pumps.
Is an IBG a Requirement for Roofing?
For roofing works, an Insurance Backed Guarantee is often a requirement rather than an optional extra. It’s commonly issued as standard for roof refurbishment projects up to a certain contract value, and depending on client or lender specifications, it may still be required above that threshold.
If your roofing contractor is competent person schemes registered (CPS)C this is usually built into their process. For Housing Associations and developers procuring roofing works directly, it’s worth confirming with your contractor whether their CPS membership already includes IBG provision, or whether it needs to be arranged separately through a broker.
Roofing IBG Cover Terms at a Glance
Cover terms for roofing IBGs can vary more than other trades, so it’s worth understanding what to check for before a policy is issued:
- Standard term: 10 years is the industry standard for most roofing workmanship and material defects.
- Extended terms: certain flat roof systems and specialist coatings may carry terms of up to 20–25 years, reflecting manufacturer warranty periods.
- Contract value: look for cover that protects the full contract value of the roofing works, rather than a capped amount. Some providers limit payouts below the actual cost of the job.
- Turnaround time: once works are complete and paid for, policy documentation is typically issued within a matter of days, though this can vary by insurer and scheme.
As with all IBGs, the policy mirrors the same term that the original roofing contractor’s written guarantee specifies.
Flat Roofs vs Pitched Roofs: Why it Matters for Your IBG
The type of roof affects both the risk profile and how the guarantee is structured:
Flat roofs: are frequently excluded from standard structural warranty policies altogether, which makes an IBG particularly important. It’s often the only long-term financial protection in place if the installer ceases trading. Flat roofing systems can also carry longer guarantee terms (sometimes 20–25 years) due to the manufacturer warranties tied to modern membrane and coating systems.
Pitched roofs: are more commonly included within broader structural warranty cover, but an IBG is still frequently required or recommended, particularly where a specific roofing subcontractor’s workmanship warranty needs separate protection from the main structural policy.
Understanding which category a project falls into can help you determine whether an IBG is filling a genuine coverage gap or adding a supplementary layer of protection.
Common Exclusions and Limitations
To ensure your housing stock is genuinely protected, Risk Managers must understand what an IBG does not cover:
- Trading Contractors: If the contractor is still in business but refuses to fix the defect, the IBG will not pay out. You must pursue the contractor legally or via arbitration.
- Design Issues: Standard IBGs cover workmanship and materials. For design liability, you should ensure your professional team carries appropriate cover.
- Consequential Loss: The policy covers the repair of the defective item (e.g., the window) but rarely covers damage to contents (e.g., the carpet ruined by the leak) or loss of rent. If the contractor is still in business but refuses to fix the defect, the IBG will not pay out. You must pursue the contractor legally or via arbitration.
Speak to an Insurance Backed Guarantee specialist
A standard contractor warranty is tied to the trading status of the company. To separate your long-term security from contractor solvency risk, we recommend transitioning to an Insurance Backed Guarantee.
We can guide you through the specific coverage options available for your development scale.
Frequently Asked Questions
Our dedicated IBG specialists have compiled the questions most commonly fielded regarding IBGs and related topics.
No. An Insurance Backed Guarantee (IBG) acts as a direct backup to a specific contractor's warranty and only kicks in if that tradesperson goes out of business. In contrast, Latent Defects Insurance (LDI) provides long-term structural protection for up to 10 or 12 years , protecting the asset itself, which means you can make a claim regardless of whether the original builder is stilltrading.
Typically, the contractor purchases the policy on your behalf as part of their service package. The premium is a one-off payment included in your quote. You should receive the policy certificate directly from the insurer or broker within a few weeks of completion and final payment.
The policy period matches the underlying contractor's guarantee. The industry standard is 10 years, though specific trades (like damp proofing) may require 20 years, and electrical works often carry shorter terms (2-5 years).
Retrospective IBGs are possible but rare and expensive. They typically require a new professional survey to verify the quality of work. It is best practice to agree on an IBG with your contractor before work commences.
No. An IBG is a "Policy of Last Resort." If the builder is still trading but refuses to fix a defect, this is a contractual dispute. You must resolve this through consumer rights avenues (e.g., Trading Standards or Small Claims Court). The IBG only triggers if the builder has "Ceased Trading" (insolvency/death/retirement).
he standard term is 10 years, mirroring the underlying contractor's written guarantee. Certain flat roof systems and specialist coatings may carry terms of up to 20–25 years, in line with manufacturer warranty periods.
Flat roofs are often excluded from standard structural warranty cover, which makes an IBG a more critical safeguard. Pitched roofs are more commonly included in broader structural cover, but a separate IBG may still be needed to protect the roofing contractor's specific workmanship guarantee.
No. The workmanship guarantee is a promise from the contractor to fix defects while they're trading. The IBG is a separate insurance policy that only pays out if the contractor has ceased trading and can no longer honour that promise – it doesn't replace the guarantee itself, it protects it.
Retrospective roofing IBGs are possible in some cases but are less common and may require a survey to verify the standard of work before cover is agreed. It's best practice to arrange the IBG before or at the point of project completion, not after.
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