Many new build home insurance policies are at risk following the collapse of insurance firm Alpha.
Alpha, who supplied 10-year structural defects insurance for new homes, was declared insolvent in early May 2018. This means that those homeowners who had taken out their structural warranty with Alpha are now left without cover.
As many policies are purchased through a broker, some homeowners may even be completely unaware that their policy has come to an immediate end.
When it comes to self builds, many lenders insist on this cover being in place before issuing any loans, so an invalidated warranty could jeopardise your entire project.
Paul Kempton, Managing Director of leading self build insurance provider Self Build Zone, says:
“It may well be that your current project has not reached ‘completion’ as yet – although you have paid the premium. In which case you should, in theory, be able to get a refund of any premium from the broker and use this to purchase a new policy from a reputable insurance professional and an A–rated insurer.
“If you have already reached completion and have your policy then effectively you have a worthless piece of paper. You will have to rely on the Financial Services Compensation Scheme (FSCS) if you have any claim”.
Selling Your House
“Selling your house [within the 10-year period covered by the warranty] could be an issue in that you have no policy to transfer and the rights under the FSCS will not apply to the new owner. This effectively means you will have to buy a retrospective warranty – which, if acceptable to the lender – will require an expensive Completed Housing Survey and then the premiums charged will be expensive.
“Self Build Zone has always maintained that everyone who buys structural warranties should only do so from A-rated insurers.”
Are You Affected?
If your warranty was provided through Alpha then it is no longer valid and you need to source replacement cover as soon as possible.
Getting Replacement Cover
If you are looking to replace your cover for your self build, renovation or extension project, Homebuilding & Renovating has partnered with leading insurance specialist Self Build Zone to provide bespoke insurance solutions at market-leading rates.