Ross Finnie, sales director SIG Design and Technology, on what roofing specifiers need to know about guarantees
Guarantees are designed to offer peace of mind in case things go wrong, but in reality getting the right cover can be a minefield. All too often, it’s only when they are needed that any shortcomings in the guarantees come to light. Then, rather than making a claim that will swiftly resolve the issue for you and your client, you may find yourself in a situation where no one will accept liability, or where one of the key parties involved in the roofing contract is no longer trading.
So beyond minimising the chances of problems occurring in the first place by careful product selection and the use of trained subcontractors, what can specifiers do to avoid this? There are several issues to bear in mind.
What do you want cover for?
Some guarantees are for product/materials, others for workmanship, installation or design. When you specify be clear what you want – if you are after latent defects cover or insolvency, for example, make sure you ask for it specifically – never assume it’s included. Always carry out due diligence on a guarantee up front to find out exactly what cover is being offered.
What’s the right insurance?
Increasingly, clients and specifiers request insurance backed guarantees as a way of reducing the risk. However this alone is not enough: you need to see the wording of the manufacturer’s and/or contractor’s guarantee and the detail of the policy behind it to assess if the cover is appropriate. All too often, specifiers and clients don’t really know exactly what is being covered because it isn’t clearly defined, and they haven’t asked enough questions to find out. Types of cover range from product guarantees to latent defects insurance (see right), but wordings vary depending on the insurance company.
Ask a professional
Don’t rely solely on the manufacturer’s advice. Always seek additional information on the insurance being offered from an independent adviser who is Financial Conduct Authority regulated. Talk to them to better understand what the various insurance policies that could apply actually cover. Consider possible scenarios that you might need cover for, including worst case.
Independent advice can be particularly important when assessing a product guarantee from a manufacturer. Ask an FCA-regulated adviser to analyse what is covered if the product is faulty – for example does it cover just the replacement of the materials or the whole cost of replacing the roof including labour and access? If you don’t ask the right questions at this stage, when you do need to call on your guarantee, you may find you don’t have the degree of cover you expected.
Do the due diligence
Carry out financial due diligence on the stability and credibility of the manufacturer, designer or installer – how long have they been trading? Do they have a good reputation within the industry? Some companies offering guarantees for roofing may not be financially stable enough to sustain lengthy insurances, which could be on their balance sheets for 10 or even 20 years, and some policies may cease if the company stops trading. A lot of guarantees appear to have insurance backing but make no mention of any insurer or the Financial Conduct Authority, which regulates the sale of insurance products. These will invariably be guarantees backed by the manufacturer only, which is of no value if they cease trading. Always read the small print. Also be aware if some manufacturers are actually agencies importing other products, which might simply fold if claimed against.
Make sure you’re fully protected for the potentially substantial consequential losses of a leaking roof relating to the occupants and their business. This can be considerable if it involves damage to equipment and relocation. Find out if the policy covers loss of earnings. Since remedial work could be lengthy and this could affect cash flow, find out how long resolution of a consequential claim is likely to take (it also might be covered by other insurances such as buildings and contents insurance).
- Professional indemnity insurance : This is bought by designers/architects and covers their legal defence costs and damages in the event of being sued by their clients for professional errors or omissions.
- Public liability insurance: covers the legal liability to third parties for bodily injury, damage to property and direct consequential losses (excluding products).
- Product liability insurance: covers the legal liability to third parties, for bodily injury, damage to property and direct consequential losses arising out of the products sold/supplied/installed. The replacement cost of the defective product itself is excluded.
- Insurance backed guarantee: steps in to fulfill the written guarantee of the manufacturer/installer, should it cease trading. Depending on the wording, it can cover defective, design workmanship or materials.
- Latent defects insurance: protects against design workmanship or material defects after completion causing damage to the building, and in most cases ensures the policy holder can go straight to the insurer rather than to individual parties. Some may have an initial guarantee period where the contractor is still responsible, during which insurers provide insolvency cover only.
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