Data centre latent defects insurance questions answered

An insurance policy, arranged before or during construction, that pays for putting right damage caused by a hidden defect in the building once it is complete. It is sometimes called a commercial structural warranty. The policy is provided by an insurer or warranty provider - we are the broker that arranges it.

Usually the structure and the weatherproof envelope - foundations, frame, floors, roof structure, roof coverings and cladding - against damage caused by a defect in design, workmanship or materials. Wear and tear, maintenance and finishes are usually excluded. The policy wording sets out exactly what is included.

No, not as standard. Latent defects insurance is about repairing the building. Damage to equipment, loss of data and the cost of downtime are generally outside it and belong with your other insurances.

Usually 10 years from completion, and some insurers offer 12. On a phased campus, each building's cover usually runs from when that building is certificated. Weatherproofing cover can start later or run on different terms from the structural cover - the policy schedule says.

Some insurers offer an optional extension for mechanical and electrical plant, and some offer loss of rent. These are not standard, not every insurer offers them, and each has its own terms and limits. See roof and envelope cover.

Usually not. It is a commercial decision, but many funders, purchasers and tenants ask for it, or for collateral warranties, before they will commit.

Before work starts on site, ideally while the design is still being finalised. The insurer's technical auditor can then review the design and see the foundations, slab and frame before they are covered up.

Sometimes, but it is harder. The insurer will want evidence of the work already done, may ask for parts to be opened up, and the price is usually higher. Our sister brand Retrospective Warranties specialises in late cases.

Usually the developer's and contractor's names, the site address, the number and size of buildings, the total build cost, planning permission, the architect's plans and elevations, structural calculations and the ground investigation report. For a conversion or extension, a structural condition survey too. See how it works.

A technical auditor appointed by the insurer. The auditor inspects for the insurer's purposes and is separate from building control and your own design team.

Often, yes. New halls, extensions and existing buildings converted into data centres can all be considered, usually with a structural condition survey of the existing building. See extensions and conversions.

Often, yes. Many commercial latent defects policies can be assigned to later owners, or can name tenants and funders, subject to the policy wording and sometimes the insurer's agreement. See investors and funders.

It can sit alongside them. Collateral warranties give a contractual claim against the contractor or a consultant, which may mean proving a breach of their contract or appointment. Latent defects insurance can respond to damage the policy covers without first pursuing them, subject to its terms and claim conditions. Whether one can stand in for the other is for the parties and their advisers to decide.

Funders have their own requirements, so we check that the insurer we propose is likely to be acceptable to the funders and purchasers involved before you commit, though each of them makes the final decision.

Whoever has the benefit of the policy at the time makes the claim to the insurer named on the policy. Some policies expect defects found soon after completion to be put right under the building contract first.

As a rough guide, around 0.95% of the rebuild cost for a data centre registered before work starts (with no broker fee on top - we are paid by commission from the provider). Large and complex facilities are priced individually, and conversions, late cases and small sites usually cost more as a percentage. See data centre warranty costs.

There is no broker fee to pay. We are paid by commission from the warranty provider, which is included in the premium.

Our terms of business and a written statement of your demands and needs, before any cover is bought. Your quotation names the insurer and shows the premium and fees separately.

No. Data Centre Warranties is an insurance broker - a trading style of Latent Defects, a trading name of Finance Delta Ltd, which is authorised and regulated by the Financial Conduct Authority. We arrange cover on a non-advised basis, and the policy is provided by the insurer or warranty provider named in your quotation.