Newton's Guide to Waterproofing Guarantees, Insurance and Warranties
Newton is dedicated to providing specifiers, contractors and homeowners with the advice and information they require to make informed decisions about the types of guarantees available for their waterproofing project. Many "guarantees" do not offer any real benefit to the client and can leave the client and or the design team with financial loss, a delayed program or much worse.
It is therefore vitally important to understand the types of guarantees and warranties available and what is covered should the waterproofing fail and the basement leak.
"In 2019, the construction insurance guarantees market underwent significant change, with a number of insurers withdrawing from the sector. Early in 2020, there was a further reduction in the number of rated insurers able to provide insurance for waterproofing - and as of July 2020, we understand that only one A-rated insurer is writing new latent-defects policies."
The information provided on this page has been written as a guide to the current state of the waterproofing insurance sector, as we understand it, although this should not be considered as being professional advice.
The term 'guarantee' is used in a number of ways to describe what are often very different forms of protection for the client. It is therefore important to understand the difference between a Warranty, a Guarantee and the various forms of Insurance that are available, and how these may be misunderstood, or their value overestimated.
A product warranty is a statutory requirement that provides for the replacement of the product if it is defective in any way. Whilst it is important to only choose products with a good product warranty from an established and reputable supplier, the product warranty specifically excludes defects that result from poor design, workmanship and/or the installation of the product.
All Newton products are supplied with product-only warranties, but be aware of the limitations. Unfortunately, in some cases these warranties are incorrectly sold as or misunderstood to be a guarantee for the waterproofing, and so it is important that the end-client is aware that the product-only warranty does not protect them from failures arising from poor design and/or installation.
Provided by reputable waterproofing contractors, this is the most important form of waterproofing guarantee. Supported by the contractors' insurance company, the guarantee protects the client from defects in the design and installation of the waterproofing. That these guarantees are supported by insurance is key, as the insurer will step in where the cost of the repair is beyond the financial means of the contractor. The client is therefore protected from the risk that the contractor liquidates their company to avoid the costs of the repair.
Other aspects of the repair, such as opening up and making good, will also be covered by high-quality installation guarantees, and the client should interrogate the guarantee to determine those with the best protection.
However, if the waterproofing contractor becomes insolvent then the guarantee dies with them. To protect against this risk, Insurance Backed Guarantees and Latent Defects Insurance, both explained below, provide protection for the client in case the waterproofing contractor is unable to honour the guarantee due to the company having ceased trading.
All Newton Specialist Contractors provide high quality installation guarantees that are underwritten by their insurers.
Limited Repair Guarantees
These are very common within the waterproofing industry and are often misunderstood as being meaningful installation guarantees. Careful reading of the small print shows that in most cases the 'guarantee' is limited to the value of the product purchased only; and in some cases, to the value of the product purchased to the area of the leak.
This means that the fixing of the leak is limited to an already established cost. If the repair is not successful for that limited cost, the attempt at repair is concluded, or the extra work and materials required to stop the leak become chargeable.
Insurance Backed Guarantees (IBGs)
Insurance Backed Guarantees only come into play when the waterproofing contractor is unable to honour the terms of their guarantee due to the company ceasing to trade.
Where a reputable contractor is used, such as a Newton Specialist Contractor, the repair will always be carried out under the terms of their installation guarantee (explained above). Since the NSBC scheme was started in 2002, no Newton Specialist Contractor has become insolvent.
If an insurance backed guarantee is appealing to you, it is important to note that not all policies are equal. Check the policy wording to confirm exactly what is covered and when, and check the rating of the insurer. The ability to offer an IBG is another requirement of being a Newton Specialist Contractor.
Latent Defects Insurance (LDI)
Latent Defects Insurance is similar to home insurance provided by the NHBC, for example, in that the waterproofing is covered by a comprehensive policy that is purchased from the insurance company by the contractor that installed the waterproofing, with cover included for defects arising from workmanship, materials and/or design faults.
After the 2-year contractor's liability period has expired, all repairs, including the cost of stripping out and making good, are the responsibility of the insurer. Furthermore, if the contractor ceases trading within the first two years, the insurer still steps in to cover the costs in the event of a failure.
The cost of the policy is calculated as a percentage of the cost of the waterproofing contract, which will vary depending on the competency and financial strength of the waterproofing contractor.
As the contract for the Latent Defects Insurance is between the insurer and the end client, it is likely to be of most interest to contractors who deal directly with the homeowner/client on their projects.
|The Newton Latent Defects Guarantee
|The Newton Latent Defects Guarantee is available on qualifying projects using multiple forms of waterproofing to achieve a minimum score of 3.0 on the Newton Waterproofing Index (see below). The application for the guarantee is made via the installer directly to Newton's A-rated insurer, rather than via Newton.
For the first two years from the date of installation completion, the responsibility for repairing any leaks and defects lies with the installing contractor. Once this period has expired, all repairs are the responsibility of the insurer.
Newton’s Specialist Contractors have been specifically audited to ensure that they meet the necessary requirements to be able to provide the latent defects guarantee.
Newton's waterproofing solutions (see below), and the products used to achieve them, have also successfully passed a rigorous auditing process to ensure that they are of sufficient quality to support the A-rated latent defects guarantee.
Policy costs vary, but carry a minimum £1,000 policy premium plus Insurance Premium Tax (IPT). Thereafter, the premium is calculated as a percentage of the contract value, however there may also be additional fees required.
Download Newton Latent Defects Insurance Summary
This information is intended only as a summary of the benefits of the insurance policy. For full details of the policy and the cover it provides, please contact Building and Land Guarantees Ltd. Building and Land Guarantees Ltd is authorised and regulated by the Financial Conduct Authority. Building and Land Guarantees Ltd, BLG House, 86A High Street, Whetstone LE8 6LQ.
|Specifying Newton Waterproofing WILL provide the following:
||What you WON'T get from Newton or a Newton Specialist Contractor:
- Class-leading waterproofing products, all of which are covered by a Newton Product Warranty.
- Meaningful installation guarantees provided by our network of Newton Specialist Contractors.
- Insurance Backed Guarantees can be supplied by all our registered contractors if required.
- A Newton Latent Defects Insurance Guarantee for the ultimate protection.
- Misleading limited repair warranties.
- Repairs limited to the value of the product you purchased, at the location of the leak or failure.
- Additional costs to you for the repair once the limited warranty cost is exceeded.
- Product warranties masquerading as installation guarantees.
Getting the Right Waterproofing Guarantee for Your Specification
Integrally linked to Newton's insurance options is our unique specification tool, the Newton Waterproofing Index (NWI). The NWI has been designed to provide specifiers and designers with a system through which it is possible to accurately assess the level of risk and potential success involved in a waterproofing design. It does this with a simple and easy to understand score for every potential specification.
Only Newton provides this level of specification advice and assistance, all supported by our guarantees, as standard.
The Newton Waterproofing Index
All scores on the Newton Waterproofing Index are based on an assessment of both the type of structure involved and the type/s of waterproofing being used.
All scores have also been audited by an A-rated insurer, enabling us to offer clear guidance as to which designs offer the best protection, and which also qualify for our unique latent defects insurance.
Solution Sheet Library
Our library of Solution Sheets combine all key information for a waterproofing design into one resource, including 3D drawings, an outline specification, 2D details and NBS clauses.
Every solution also carries an NWI score, clearly indicating the level of waterproofing protection that it can provide.
For more information on our unique latent defects insurance policy, please read our insurance FAQs below, or alternatively please submit an enquiry form at the bottom of the page, or call us on 01732 360 095.
Bespoke Latent Defects Guarantees - Frequently Asked Questions
|How Does the Policy Work?
||When Does the Policy Start?
|During the relevant contractor liability period the policy is covered by the Newton Specialist Contractor who installed your system. After this period and up to the end of the insurance term, for any failures the claim will go directly to Newton’s A-rated insurer.
||The policy automatically begins from the date of installation completion. Your installer will be responsible for attending to any guarantee issues during the contractor liability period, after which the guarantee will transfer to the insurer.
|What Happens if the Installer Goes Bust?
||Is There an Excess Payable?
|If the installer should cease trading within the contractor liability period, liability for the guarantee automatically transfers to the insurer, meaning you remain fully covered.
||Yes. There will be policy excesses payable for any claim against the insurer. This is a standard feature of this type of guarantee, and will be set by the insurer.
|Is There a Cost?
||Are Jobs Inspected?
|Yes. The premium is included in the installer’s invoice. The latent defects insurance is a minimum £1,000 plus insurance premium tax (IPT). Thereafter the premium is calculated as a percentage of the contract value. For the insurance backed guarantee the premium is 2.5% of the contract value, at a minimum of £750 plus IPT.
||Yes. Projects are audited by Newton’s Technical Managers for quality assurance and sign off. Where the waterproofing contract value exceeds £50,000 there may be a requirement for a third-party auditor to perform the inspections in order to satisfy the insurance underwriters’ requirements.
|Is There a Cost for the Inspections?
||Is the Insurance Index-Linked?
|Yes. Both the quality assurance site visits by Newton and any required inspections by a third-party auditor (where the contract value is above £50,000) will be at an additional charge.
||Newton's latent defects insurance is index-linked. The Newton Insurance Backed Guarantee is not.
|Does the Guarantee Cover Decrease Each Year?
||Who Can Offer the Newton Latent Defects Guarantee?
|As it is index-linked, the cover value of latent defects insurance actually increases each year. Beware of product-only warranties from other suppliers that do reduce in value year-on-year.
||Our Latent Defects Guarantee is available when Newton products are installed by a Newton approved contractor on a project that achieves a minimum NWI score of 3.0.
The Newton IBG can be obtained for any project where our products are installed by a company who have been properly trained by Newton.
|How Exclusive Are These Guarantees?
||How Long Are the Guarantees For?
|As far as we know, no other UK waterproofing supplier has access to insurance guarantees that are backed by an A-rated UK insurer, and provide cover for the design, workmanship and materials.
||The latent defects insurance has a 12-year term, and the insurance backed guarantee has a 10-year term.
|Are the Guarantees Transferable?
||What Are the Automatic Extensions to the Policy?
|Yes. The guarantees are issued against the building, not the owner or occupier, meaning there’s no need to inform the insurer if the building changes hands.
||This depends on whether you have the latent defects insurance or the insurance backed guarantee, however in the event of a valid claim, and subject to limitations, in addition to the contract value, some of the automatic extensions that the insurer will also pay for include additional costs and expenses, access costs, fees and the removal of debris. Please check the individual policy terms for full details.
|How Do I Apply for the Insurance?
||When Do I Receive the Insurance Certificate?
|For the LDI, prior to the waterproofing installation commencing, the installer will need to apply to Newton’s insurer, providing the full project details (including the waterproofing contract value and a projected completion date), in order to obtain access to the guarantee.
For the IBG, if the contract value is less than £50k and the installer has been approved to provide the insurance, the contractor simply needs to notify the underwriter once the project is signed off.
||Upon installation completion, once the quality assurance process has taken place (or third-party audit), and once the account has been settled with the installing contractor, then the guarantee certificate will be issued to the contractor for transmission to the client.