Case Studies

Latent Defects — Distribution Warehouse

Our client, an experienced and well known developer, was negotiating for provision of a 900,000 square foot distribution warehouse in the UK.

They requested a broad indication of likely costs to put a commercial latent defects policy in place during their initial negotiations. Over the following months we provided various options and eventually the deal was signed with the requirement to provide Latent Defects cover.

We then undertook further negotiations with funders, lawyers (both funders and purchasers) and insurers culminating in the provision of cover for a £30m build. Various extensions were built in to the cover including Mechanical and Electrical equipment and Business Interruption covers.

We drafted and redrafted the policy until the cover was accepted by all parties and issued accordingly.

Tesco Case Study

When Tesco were planning to build their new flagship store in Dublin, they pushed for quality every step of the way.

When it came to cladding for the store, they wanted special structural insulated panels overlaid with larch sheeting to compliment the local environment. The issue the contractor faced was that Tesco wanted a long term insurance policy on the exterior of the store. We worked closely with a major broker to provide a bespoke policy to deliver the insurance cover needed, therefor assisting the contractor to win the contract.

Our technical inspector worked closely in partnership with the contractor throughout the project and a first class exterior was delivered and installed within tight deadlines, to the high specification demanded by Tesco. At BLG, we are used to working within tight deadlines for our clients and this was a perfect example!.

We then undertook further negotiations with funders, lawyers (both funders and purchasers) and insurers culminating in the provision of cover for a £30m build. Various extensions were built in to the cover including Mechanical and Electrical equipment and Business Interruption covers.

We drafted and redrafted the policy until the cover was accepted by all parties and issued accordingly.

Royal Albert Hall

BLG was approached to arrange an Insurance Backed Guarantee for works being undertaken at the Royal Albert Hall in London. A specialist contractor undertook liquid waterproofing works to the gallery balconies in 2019 and 2020, and 10 year policies were provided for the respective works to one of the UK’s most treasured and distinctive buildings.

Commercial Unit Development

Building and Land Guarantees was approached by one of the largest property developers in Europe with a 14 unit site which they were funding the final stages on.

The property was owned by a receiver (insolvency practitioner) as the bank, following the previous developers demise, had sent them in to complete the work. Our client was funding the finalising of the development with the option to then buy a development from them when the project was completed.

Over the course of 7 years, the project had used 5 different contractors for various different reasons. Worryingly, no guarantees were in place during any of the works and they were extremely difficult to obtain due to the type of work being done. Our client had a quotation from another warranty provider at around £200,000 premium for what it was and we were able to place cover at less than £100,000 initially.

In addition to a massive saving, we were also able to assist in getting the properties through the insurers audit and therefore the sales completed on time (despite the lack of information available) allowing the owners to move in.

Birmingham

A large national developer approached BLG to provide guidance on a 237 residential unit (plus commercial on ground floor) block in the centre of Birmingham. BLG surveyed the available market and used our expertise to identify an insurer that could cover the entire build cost of over £50m. Cover was placed on a new build block and included cover for Loss of Rent to protect the client who is retaining the property at completion. Placing the cover prior to works commencing ensured the most competitive costs could be negotiated.  The build is in progress and will complete in 2023.

Quay Wall

BLG were approached by a global UK based insurance broker who was working with a large contractor on a new build development in the North of England. The issue was that a wall bordering a major river was to be replaced as part of the development but the risk of defects could not be provided for within traditional collateral warranties. The build cost was approaching £20m with the residential development costing £38m. The solution was to obtain defects cover in respect of the wall which would then give comfort to the residential developers to build in excess of 400 homes behind the wall. Cover was negotiated and agreed with a French insurer utilising a civil works defects policy and importantly included consequential damage as a result of the wall failing, to the housing development.

Insurance Backed Guarantee for a Cladding Contractor 

Back in April 2021, we received a new enquiry from a specialist cladding contractor. Their client had requested an insurance policy for the works which they had very recently won the tender for. The contract consisted of the removal of an existing combustible insulated render system to the outer façade of a block of flats in Buckinghamshire and to replace it with a non-combustible alternative. The system that was used was the Weber Therm XM System and the total contract value was in the region of £3,000,000.

After discussing their requirements over the phone, we advised that an Insurance Backed Guarantee (IBG) would be the most suitable product. We approached our A-rated IBG insurer and shortly after recieved terms, and having presented the quotation to the client, they were keen to proceed.

The clients are now in the process of having the technical audits carried out at each major stage and with the help of our specialist in-house team assisting the client through the surveys, they should receive their Certificate of Insurance very shortly after the project is completed.

Two detached residential properties in West Sussex

A large national builder approached BLG to provide guidance on two detached residential properties located in West Sussex. They had insured the whole site through a major warranty provider, however when they approached completion, the insurer did not wish to cover two of the plots, due to these having slightly different specifications to the other properties within the development site. The developer was left with the problem of not being able to sell the properties due to them not having a suitable insurance policy to satisfy any potential purchasers mortgage lender.

BLG surveyed the available market and used our expertise to identify an insurer that would be willing to cover the properties, despite the fact they had been declined by the client’s usual warranty provider. After careful analysis of the market, we presented the risk to the providers that we were aware would be able to consider a risk such as this.

We obtained a competitive and suitable quotation from an A rated warranty market, which the client was very keen to proceed with. Following a satisfactory survey, the certificate of insurance was issued and the property developer has been able to sell the houses onto the property market.

Gravesend

A leading UK housebuilder approached BLG to obtain insurance to cover latent defects in works required for 9 new residential properties. The properties in question had suffered damage due to subsidence shortly after  completion, and the housebuilder re-purchased the properties from the owners to enable them to  complete remedial works. BLG was able to source and arrange cover for the £2m plus ground stabilisation scheme along with superstructure repairs under a Latent Defects Insurance policy in advance of the properties being placed back on the market in 2020. Additional cover was also obtained as part of the policy cover in respect of consequential damage.

Kent

BLG was approached by a reputable Insurance broker, whose client was a new start-up company, who were acting as Main Contractor and Developer on a scheme of 18 townhouses. Although the two Directors had a considerable amount of experience, as the Newco had no trading experience, this made the scheme unattractive to some of the traditional warranty providers. In addition to this, the new development was in a coastal environment, where the micro-climate presented challenges. BLG used our experience to provide a detailed submission to the Insurance market and we were able to obtain a Warranty that was acceptable to lenders, is backed by “A” rated Insurers, and where no additional supporting collateral was required from the Newco. The build is in progress and will complete in 2023