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Replacing Your Alpha Latent Defect Policy

Since the demise of Alpha Insurance in 2018 over 14,000 policyholders were issued with refunds from the FSCS. Finding replacement cover for individuals and businesses has been mixed, some customers were unsure of where to go, others were able to get suitable cover in place. Our Specialist Risks team are still being queried on this almost two years later, so to help other previous Alpha customers who may still be struggling we’ve put together a little information to help clear up any confusion around the Alpha failure. 

 

What Happened to Alpha Insurance?

Alpha Insurance was a Danish-based insurance firm who provided a number of insurance products to the UK market, including, car & fleet policies, professional indemnity and gap insurance to name a few. Alpha Insurance was financially backed by CBL Insurance, who also shared a lot of the risks as they provided reinsurance services to Alpha. CBL Insurance became insolvent in 2018 which was due to a downgrade in their credit rating, failure to meet solvency conditions and misreporting to the regulator. Sadly, the demise of CBL Insurance meant that Alpha Insurance was greatly affected. 

The UK’s FSCS worked with the Danish regulator to find a suitable alternative solvent provider, but this wasn’t possible. Time pressures also played their part as many customers left without Latent Defect Insurance were not complying with the conditions of their mortgage, so the FSCS issued refunds to affected customers. 

 

What is Latent Defect Insurance?

Latent Defect Insurance (LDI), also referred to as Structural Warranty Insurance will be required if the premises that has been developed is to be sold on as lenders will insist there is one in place in order to provide finance. Additionally, this removes the risk of financial stress as the warranty covers the costs involved in the correction of the defect.

The policy covers faulty design, workmanship or material problems or defects for up to a period of 12 years after practical completion, they are designed to cover the costs incurred to rebuild or rectify the property whether partially or in full. Unlike other policies such as Architect’s Certificates, Collateral Warranties and Professional Indemnity Insurance, a Latent Defect Insurance policy does not require proof of fault, just proof of a defect.

 

Cover Includes:

  • Cover of the structural integrity of basements and car parks
  • Cover against contaminated land
  • Alternative accommodation,
  • Additional costs
  • Professional fees
  • Removal of debris
  • Ingress of Water

 

I’ve Had a Refund, I Need to Replace My Latent Defect Policy.

A specialised insurance broker should be able to find suitable alternatives for you. It’s important to note that at this stage, the premium for your replacement cover may exceed the refund you’ve been issued but this isn’t always the case. There are a number of solvent providers in the market, however as the number of providers falls, this can sometimes have an effect on the cost of the premium. A specialist broker with good market access should be able to compare premiums across a number of providers to ensure you get a suitable alternative for the most competitive cost. 

If you’ve been affected by the collapse of Alpha Insurance and you’re looking to replace your policy, speak to the expert Specialist Risks team at Inspire Insurance today. Call us from 9 am to 5 pm Monday to Friday on 02476 017646 or learn more about Latent Defect Insurance online https://inspireinsurance.co.uk/sectors/construction/latent_defect_insurance




 

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