17/09/2010 By http://www.postonline.co.uk ( Source: http://www.postonline.co.uk )

Allianz offers long-term defects cover for civil engineering projects

The cover lasts for 10 or 12 years from practical completion. The construction industry has traditionally relied upon collateral warranties as a method of redressing financial losses due to a defect.

For large complex projects with numerous subcontractors and fabricators this can result in lengthy and contentious litigation against third parties who may ultimately be economically constrained from paying.

The cover offered by AGCS is a first-party cover where the insured need only prove ‘damage’ has occurred, therefore avoiding the need to prove negligence in court and the associated time and costs. "Inherent defects insurance has been available for many years in the residential building industry and is even a requirement of the Council of Mortgage Lenders before its members can lend to residential buyers.

The paradox is that it is required at the residential level but not for large commercial projects where the financial investment is much greater," commented Tim Chapman, chartered civil engineer and senior engineering underwriter at AGCS.

Each policy is accompanied by a technical inspection service provided by an approved panel of consultant engineers. This service focuses on minimising the defects as well as providing an independent record of the project at practical completion.

Mr Chapman added: "AGCS firmly believes that TIS’s, as a part of IDI, offers an industry solution to support the work of the Construction Industry Research & Information Association in encouraging better understanding and control of structural safety issues in the industry."

This cover is available to a project owner, a SPV, a concessionaire or in certain circumstances the contractor.