Building a new commercial premises or renovating an existing property? Well, you may need latent defects insurance. In this post, we’ll cover exactly what latent defects insurance is, what the policy covers and who benefits from this form of insurance. 

What is Latent Defects Insurance? 

Latent defects insurance (LDI) is a form of structural warranty. It pays the costs associated with repairing, replacing or rebuilding a property or commercial premises if a design fault or construction defect is discovered after practical completion. 

Put simply, if there is a design defect, a workmanship issue, a problem with the materials used or an ingress of water to the waterproofing envelope, then rectification of the issue is covered by latent defects insurance. Plus, these policies provide ‘no-fault cover’ and there’s no obligation to prove negligence, which helps to avoid complex litigation. 

As some structural defects in new-builds and conversion projects can take months or even years to appear (particularly if faulty materials have been used during the construction process), latent defects insurance policies tend to last for a period of 10-12 years. 

Latent defects insurance is a popular product because it helps mitigate risk for property developers and funders, and provide additional security for owners and tenants. The cover is written for the benefit of the property, rather than a single entity, meaning it is transferable between tenants and owners over time. 

Latent defects insurance is usually arranged at the start of the project, before building commences. Payment is usually made upfront, via a single premium. That said, it is also possible to arrange latent defects cover for a property or project that is already underway. 

What is a Latent Defect?

A latent defect is an issue that is not apparent at the time of construction/completion. The opposite is a ‘patent’ (obvious) defect, which is usually covered by a collateral warranty. 

What Does Latent Defects Insurance Cover? 

Exactly what’s covered by a latent defects insurance policy varies on a policy-by-policy basis. For example, a latent defects insurance policy for a build-to-rent property would look different to one for a series of commercial buildings. 

However, generally speaking, latent defects insurance covers the cost of repairing structural defects and structural damage to the waterproof envelope of a building. It’s also common for the policy to cover mechanical/electrical failures, the cost of replacing faulty materials and the cost of alternative accommodation.

It’s important to remember here that latent defects cover operates on a no-fault basis, meaning there is no need for a legal claim or a requirement to prove negligence. If any defect covered by the policy causes damage, the policyholder does not need to prove who was at fault. This means the rectification process usually happens quickly. 

Remember, as the policy is designed to protect ‘latent’ defects (defects that will only become apparent after construction has finished), policies tend to last for 10-12 years after practical completion. 

Who Needs Latent Defects Insurance? 

Latent defects insurance protects against a range of risks, ensuring the building’s value and structural integrity. As a result, it’s essential for developers, property owners, investors and lenders alike. However, even though they don’t traditionally purchase the policy, latent defects cover provides the greatest benefit to property owners and occupiers. 

Of course, latent defects insurance benefits various parties depending on the type of build and its stage in the construction process. However, here’s a list of some of the people who benefit from latent defects insurance and how: 

• Property developers and house builders: LDI policies help these people protect their investment. Plus, they can pass the policy on to future owners, who are also protected and receive security. 
• Contractors: Many contractors will be required to take out a building warranty on behalf of their clients. As a result, LDI helps the contractor meet the requirements of the Defects Insurance Period.
• Mortgage lenders and third-party funders: LDI helps these people protect their investment in the project or build. 
• Property owners and renters: These people are the ultimate beneficiaries of a latent defects insurance policy. This is because, if a latent defect arises and the property they have purchased or rented is damaged as a result, they are not liable for the cost associated with fixing the issue. 

Why Arrange Latent Defects Cover with Eximia? 

At Eximia, we have decades of experience when it comes to arranging latent defects cover for residential, commercial and mixed-use properties and developments. 

No matter whether you’re converting a single building or working on a large-scale development, we can broker a policy that meets your needs. To discover more, call us on 0114 345 10 20 or email info@eximiabroking.co.uk.

In the past few months, the insurance cycle has returned to ‘soft market’ conditions. In layman’s terms, this means that competition is high among insurers and premiums are lower for buyers as a result. 

At face value, this is great news for buyers. However, all that glitters isn’t gold, and a soft market can also expose buyers to a significant amount of risk. This is particularly true for those who don’t use an experienced broker to advise on the adequacy of the cover on offer – the cheapest available policy isn’t always the best! 

Unsure on what soft market insurance is or how current market conditions might affect your premiums in 2026 and beyond? In this blog, we reveal all. 

What is a ‘Soft Market’ in the Insurance World? 

Put simply, a ‘soft market’ is a phase in the insurance cycle. As the name suggests, it’s seen as the opposite of ‘hard market insurance’. 

When the market is referred to as ‘soft’, it’s considered to be a ‘buyer’s market’. This is because, in this phase of the cycle, insurers are aggressively competing for business. As a result, premiums are lower and coverage is readily available. 

By way of comparison, in a ‘hard insurance market’, there’s limited competition from a smaller pool of insurers who are generally unwilling to take on extra risk. This then drives the price of premiums up. 

What Are the Characteristics of a Soft Insurance Market? 

In a soft market, competition between insurance providers is high. This is partially because, in a soft market, insurers have increased capital (capacity) in order to underwrite risks. Over time, this leads to a surplus of supply over demand. 

This ultimately means that premiums often reduce as insurance providers look to attract new customers or retain current clients when their policies are up for renewal. 

Added to this, due to the increase in capital and competition, insurers usually also make their terms and conditions more flexible in order to increase their competitiveness in the market. This means that wordings become broader in meaning and coverage limits are increased. 

Finally, and linked to the above, in order to take on more business and increase retention rates, some insurance companies will be less stringent in their risk assessment and more willing to negotiate terms to secure a deal. For all of these reasons, a soft insurance market is traditionally very favourable to buyers. 

What Causes a Soft Market to Occur? 

Soft markets are created by the presence of a number of different factors, including: 

• Increased capital: When the insurance industry is profitable, a large amount of new capital enters the market and new insurers appear. This influx of money leads to a greater amount of competition, meaning that more businesses are competing for the same number of policies. 
• Low catastrophe losses: Natural disasters and large-scale claims put huge pressure on the insurance industry. However, if none of these events take place for a prolonged period of time, the financial strain placed on insurers is minimised and insurers have a greater appetite for taking on more risk as a result. 
• Investment returns: High interest rates and/or strong stock market performance allow insurers to generate profit from investments, enabling them to lower premiums on the underwriting side.

Generally speaking, if we see all of these three factors come into play (or at least two of the factors simultaneously), the insurance market softens considerably. This is the position we’re in as of February 2026. 

However, it’s worth keeping in mind here that the insurance market is cyclical and will always return to a hard market eventually. After all, it only takes one catastrophic global event (e.g. a repeat of a terrorist incident like 9/11) or a couple of severe hurricanes in the USA for the market to swing back to hard market conditions, as insurers become much less willing to take on risk and may even be over-exposed. 

What is the Current State of the Insurance Market? 

The end of 2025 and start of 2026 saw a huge shift in the insurance market, with many global insurance sectors transitioning from a prolonged hard market into a softening phase. For example, global brokerages such as Willis Towers Watson (WTW) have reported that nearly all commercial lines are now in a soft market. 

Similarly, in the UK specifically, the commercial market saw rates fall by an average of 4% in late 2025. However, it’s worth noting here that some experts do not predict that this trend will continue into 2026 and instead believe that the market may instead be ‘bottoming out’ at this level by mid-2026. 

When looking at specific sectors, it’s notable that directors and officers (D&O) and cyber insurance were among the first products to soften. By way of comparison, property and motor products have been slower to transition to soft conditions due to persistent inflationary pressures. 

Does a Soft Market Pose an Opportunity or a Risk for Buyers? 

Although a soft market provides buyers with several benefits (notably lower prices), these conditions can lead to unsustainable pricing. 

For example, if a soft market prevails for a sustained period, some insurers may price their policies below cost in order to gain market share. However, they cannot sustain these losses for prolonged periods and, as a result, they may then hike their rates sharply or withdraw capacity entirely when the cycle inevitably ‘hardens’ again, as it always does. 

On top of this, although an increase in flexibility on policy wording and less stringent risk assessments can provide benefits to buyers, they can also lead to hidden coverage gaps that can be hugely problematic in the event a claim needs to be made. 

Due to this, although we recommend that our customers take advantage of the pricing benefits provided by a soft market, they should always work with a knowledgeable and experienced broker who can advise on cover adequacy. After all, if you take out the wrong product or become too price focused, you may end up taking out inadequate cover or choosing an insurer who will simply pull the plug when the market hardens once again. 

Hard markets always last longer than soft ones and, once the market inevitably hardens, many insurers will pull away from particular classes or hike prices and keep those prices higher for longer to recoup losses and put cash back in the kitty.

Unsure on soft market insurance conditions in 2026 and how the current market might impact your business? Get in touch with us today. We can broker a policy that suits your requirements at an appropriate premium.

If you’re a manufacturer or distributor, then you should consider taking out product recall insurance. 

This is because, if your product needs to be removed from the market because it’s faulty or unsafe, then product recall insurance can help protect your business from suffering from severe financial losses and reputational damage.

No matter whether there’s a manufacturing error, an issue with contamination, a product has been tampered with or you’ve uncovered a design flaw, product recall insurance can help safeguard your business. 

Which Companies Need Product Recall Insurance? 

Businesses in a range of sectors are at risk of facing product recalls. This includes everyone from restaurants and beverage distributors to automotive manufacturers and pharmaceutical companies. In short, most companies who are manufacturers, distributors or are involved in the supply chain in any way may benefit from product recall insurance. 

In the modern world, regulatory oversight is only expanding. This means that companies are increasingly falling short of exacting safety and quality standards. Plus, added to this, global supply chains are becoming more and more complex, and there are liabilities for those involved at each stage of the product journey.

For this reason, product recall insurance is becoming more suitable for an increasing number of businesses of all sizes and in most industries. 

What Does Product Recall Insurance Cover? 

If your product is withdrawn from the market due to safety concerns, then product recall insurance covers the cost of notifying your customers of the recall, the transportation and destruction of the offending product and even brand rehabilitation, among other things. 

Overall, most product recall insurance policies cover the following: 

• First-party costs that are incurred directly by your business, including: 
  • Notifying your customers and advertising the issue to people who may have been impacted 
  • The shipping, storage and disposal or destruction of the recalled products 
  • The cost of manufacturing new/replacement products
  • The redistribution of the new, safe products 
  • The cost of lost sales and business reputation

• Third-party costs and liabilities to others, including: 
  • The costs associated with reputation management, including PR, marketing and promotional activities that can be used to restore customer trust 
  • Access to crisis management consultants/experts who can provide advice during the recall process. These experts can also help you if you’re facing pressures from regulators and other suppliers

Why is Product Recall Insurance So Important? 

If you’re a manufacturer, distributor or you’re involved in the supply chain in any capacity, then you should seriously consider whether product recall insurance is right for your business and can help protect you from the risks you face. 

After all, product recall insurance can provide you with financial protection if something goes wrong. Remember, product recalls are incredibly expensive. 

In fact, research from Allianz has shown that the average cost of a product recall claim is €12.4m in the automotive industry and €7.9m in the food industry. It’s easy to see why this is the case, too. If you remember, back in November 2017, IKEA was forced to recall 29 million chests of drawers from the market. That’s a lot of chests of drawers to take off the shelves! 

That said, it’s a common misconception that only large manufacturers need to take out product recall insurance. A company of any size can be forced to recall a product, and smaller companies may find it much more difficult than larger ones to meet the time and monetary cost of this. 

How Does Product Recall Insurance Differ From Public Liability Insurance? 

Some people confuse product recall insurance with public liability insurance. However, if you currently have a public liability insurance policy in place, then it’s important to understand that product recall is usually excluded from this cover.

This is because public liability insurance is usually only used when there is damage or injury because of the use of a product by a third party. By contrast, product recall is a first-party cover.

Speak to Eximia About Product Recall Insurance 

Here at Eximia, our team are experts in brokering bespoke product recall insurance policies for businesses of all sizes. We can help design a policy that suits your level of risk and ensures that you’re supported in the event of a product recall or contamination incident.

So, if you’re considering taking out a product recall insurance policy, put your business in our hands. After all, we’ve been getting it right since 1953. Please get in touch with our team by calling 0114 345 10 20 or emailing info@eximiabroking.co.uk.

Starting a large-scale construction project? You may need a collateral warranty. Here at Eximia, we’re well-placed to advise you on this. After all, we’re expert construction insurance brokers who have an in-depth understanding of collateral warranties, professional indemnity insurance and public liability insurance. 

Unsure what collateral warranties are and why you might need one? Well, in this post, we reveal everything there is to know about collateral warranty insurance. 

What is a Collateral Warranty? 

In construction, a collateral warranty is a contract between a professional consultant (such as an architect, engineer or building contractor) and a third party (such as a bank, purchaser or tenant).

The warranty assures the third party that certain obligations will be fulfilled. These obligations typically relate to the quality of the work carried out, compliance with regulations and future performance. Crucially, the warranty also gives contractual rights to the third party. 

In simple terms, a collateral warranty acts as a bridge between parties that may not have a direct relationship under the main contract. It creates a legal link between a party involved in the original contract, such as a contractor or consultant, and a third party, such as a funder, purchaser, or tenant.

A collateral warranty is important because, without one, the third party would have no direct legal recourse against a contractor if something went wrong. Ultimately, a collateral warranty gives the beneficiary the right to claim for losses that would otherwise not be recoverable.

Common Clauses Included in a Collateral Warranty 

A collateral warranty includes various clauses that shape the warranty’s contractual and legal framework. Common clauses include: 

• An indemnity clause that requires the warrantor to indemnify the beneficiary from specific losses or liabilities.
• A duty of care clause that sets the standard of care expected from the warrantor in executing their obligations, emphasising reasonable skill, care and diligence. 
• A limitation of liability clause that curtails the warrantor’s liability for certain damages or losses, often capping the amount to a multiple of contract value or fees.

Added to this, other clauses, such as notices, assignment, governing law and jurisdiction, severability and termination help to establish procedural guidelines, address assignment permissions, designate legal jurisdictions, ensure contract coherence and delineate termination circumstances.

Collateral Warranties: A Practical Example 

The above may seem a little abstract to you, so let’s take a look at a way in which a collateral warranty would apply on a practical level… 

Let’s say you’re engaging a developer who will help your company build a new apartment block. That developer will then appoint a contractor who will carry out the building work. The relationship between the two will then likely be governed by a building contract. 

However, in this scenario, you have no direct contract in place with the contractor, as their contract is with the developer rather than you. For this reason, you essentially become a third party to the building contract. 

This means that, if you incur losses due to a defect in the completed work (either due to a design or construction error), then you have little to no protection in law. 

In this scenario, a collateral warranty bridges the gap between the employer (you) and the contractor who was employed by the developer. The warranty gives you the right to enforce the original building contract and means that you can claim any losses directly from the contractor that caused them.

It’s also important to state that an eventual tenant in one of the apartments also wouldn’t have a direct contract with the builder. As a result, they would suffer the same lack of contractual protection against defective workmanship. However, a collateral warranty could also provide them with protection from losses in the same way.

How Does A Collateral Warranty Tie in With Insurance? 

Usually, in the construction industry, a party requesting a collateral warranty will specify the insurance requirements that contractors and consultants must have in place in order to fulfil their obligations under the warranty. This may include specific limits of both professional indemnity and public liability cover. This then ensures that contractors and consultants have adequate financial protection against potential liabilities.

Added to this, the collateral warranty may also stipulate how long this level of cover needs to be in place for. This may exceed the duration of the original contract. 

In the construction industry specifically, it’s not uncommon for a collateral warranty to require a contractor to maintain a specific level of insurance for up to 12 years. This means that all parties that rely on the collateral warranty have recourse to insurance coverage for any defects or issues that may arise well into the future.

Get In Touch to Learn More

Interested in learning more about collateral warranties and how they’re suited to protecting you? Get in touch with our experts today. Simply call us on 0114 345 10 20 or email info@eximiabroking.co.uk.