The 10-year structural warranty at the heart of construction insurance

Some countries such as France, Morocco, Algeria and Tunisia impose the underwriting of a 10-year construction insurance.

What does the 10-year warranty cover?

The 10-year insurance covers damage caused to the building after the acceptance of the work.

In France, the law abides any person who initiates construction works to underwrite this policy before the start of the work, thus blocking overly innovative projects and long and difficult negotiations between builders and insurers.

In some countries a professional third-party liability policy is required for architects and designers.

How to underwrite a 10-year warranty?

To underwrite an insurance contract including the 10-year warranty, the builder is required to inform the insurer of the use of uncommon techniques. Under penalty of Law, the insured is required to mention any form of innovation in the risk declaration form. This statement represents a contractual obligation.

The use of new materials and/or avant-garde architectural techniques represents an additional risk.

The insurer will analyze the impact of the novelty during the construction phase. Upon examination of the file, the insurer may exclude certain risks or damage caused to parts of the work or to some property.

Some exclusions may be temporary and disappear if the construction does not exhibit any weakness during a given period of time.

The insurer may also limit its commitments per claim and per insurance period. High deductibles can be used to involve the insured in the risk- taking process.

10-year warranty and complex works

For highly complex works, the intervention of one or more consultants and experts is required for the underwriting of a 10-year structural warranty.

It is common that insurers deal with non-standard sites. This applies for instance to:

• The Khalifa tower in Dubai,
• The entire Palm Island housing complex also in Dubai,
• The Bilbao museum (Spain),
• the Confluences museum in Lyon (France).

These works, often prototypes, with daring shapes, defy the laws of construction. Delays in obtaining insurance and reinsurance coverage are likely to jeopardize such projects.

Blockages are usually not definitive. Further scientific analyses are conducted and in some rare cases, abandonment of innovation is necessary.