Jane Dotson
Insurance-backed guarantees (IBGs) are a type of insurance policy that protects customers against defective workmanship or product failures if a contractor cannot honour their guarantee. IBGs are common in purchases and cover many areas, including tangible goods and services such as building work carried out in the home. They provide peace of mind and protection for consumers by ensuring that their investments are safeguarded if the contractor ceases to trade or is unwilling or unable to resolve issues. IBGs can also be transferred to new property owners, adding value and ensuring continued coverage for subsequent homeowners.
| Characteristics | Values |
|---|---|
| Transferable to new homeowners | Yes |
| Cost | Covered by the installer |
| Maximum period of cover | Up to 10 years |
| Activation | Automatic once the installer has registered the consumer's installation and paid the premium |
| Protection | In case the installer ceases to trade or cannot complete work to an agreed standard |
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What You'll Learn
Transferability to new homeowners
An Insurance Backed Guarantee (IBG) is a standard part of purchases nowadays. It provides protection to homeowners and businesses when a contractor fails to complete work to an agreed standard or provide peace of mind if the contractor ceases to trade.
IBGs are transferable to new homeowners. If you are looking to sell your property and your works are still under guarantee, there is the possibility to pass on the IBG to the new homeowner. The policy will only be transferable if the installer’s written guarantee is. If it is, then the benefits will be transferred to the new homeowners, whether that’s someone moving into your old property or if you are moving into a new one.
There may be a small admin charge for the transfer. To find out more, check the ‘Transferability’ section of your policy to see the full conditions.
It is important to note that the period of cover should be equal to the maximum guarantee period provided by the installer/contractor. The maximum period of cover is up to 10 years. An insurance policy cannot be greater than the guarantee provided by the installer/contractor.
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Protection against workmanship defects
An Insurance Backed Guarantee (IBG) is an insurance policy paid for by the installing contractor that provides consumers with protection when undertaking home improvement projects. IBGs cover the installation in the event that the contractor ceases to trade during the term of the guarantee.
IBGs cover defects in workmanship or materials for up to 10 years, which is the period often given by home improvement companies. If a defect arises, the contractor will normally honour their responsibilities by attending to the defect at no cost to the consumer, as set out in their written guarantee. However, if a contractor ceases to trade, their written guarantee would be useless, and the consumer would be left with a worthless guarantee.
This is where an IBG comes in. An IBG will meet the reasonable cost of rectifying defects up to the limit of the original contract price. For example, PWSC's insurance provider covers the bill for specified structural defect repairs for up to 10 years. An IBG provides complete reassurance that a project will be fully covered if anything happens to the company carrying out the work.
By law, workmanship must be guaranteed for a minimum of two years following installation, and this guarantee must be transferable to the new property owner if the property is sold. Some IBGs may also be transferable to a new homeowner, providing the installer's written guarantee is transferable.
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Honouring terms of guarantee
An Insurance Backed Guarantee (IBG) is an insurance policy that backs the original guarantee given by a contractor. It provides consumers with cover for an installation if their contractor ceases to trade during the term of the guarantee. IBGs are also known as Workmanship Warranties.
IBGs protect consumers against workmanship defects that may arise after project completion. This includes poor installation or substandard work. They ensure that any repairs required are covered, even if the original contractor is unable or unwilling to resolve the issue.
IBGs also provide financial protection against defects in materials or products used in construction. This ensures that clients are not left out of pocket if a product does not perform as guaranteed.
If an installer provides an IBG and then ceases to trade, the insurer will honour the terms of the guarantee issued by the installer. The insurer will send qualified tradespeople to assess the issue and arrange for remedial work to be carried out if the claim is valid. The period of cover should be equal to the maximum guarantee period provided by the installer, up to a maximum of 10 years.
IBGs can be transferred to new property owners, adding value to the property and ensuring continued coverage. This is particularly relevant if the original owner sells the property while the works are still under guarantee. There may be a small admin charge for the transfer.
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Cover for installations
Insurance-backed guarantees (IBGs) are generally transferable from one homeowner to another. This means that if you sell your home, the new owner will be covered by the IBG for any installations that were previously covered. IBGs provide protection for homeowners in the event that an installer or manufacturer goes out of business or ceases to trade. They are often used for high-value installations such as double glazing, solar panels, or a new boiler.
When it comes to cover for installations, it's important to understand what is and isn't included in an IBG. The guarantee will typically cover the cost of repairing or replacing the installation if it becomes faulty within a certain time frame. This includes issues arising from incorrect installation or defective materials. However, it's important to note that IBGs do not cover general wear and tear, damage caused by misuse or negligence, or issues that arise from a lack of maintenance.
Most IBGs will cover the full cost of repairing or replacing the installation, up to a certain limit. This limit will depend on the specific policy and the value of the installation. In some cases, there may be an excess fee that the homeowner is responsible for paying. It's also worth noting that IBGs typically do not cover any associated costs, such as the removal or disposal of the old installation, or any additional work that may be required as a result of the repair or replacement.
To ensure you have the correct cover in place, it's important to carefully review the terms and conditions of the IBG before purchasing. This includes understanding the length of the guarantee, as well as any exclusions or limitations. It's also a good idea to check that the installer or manufacturer is reputable and has the appropriate insurance in place. By taking these steps, you can ensure that your installations are protected and that any issues can be resolved quickly and efficiently.
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Period of cover
An Insurance Backed Guarantee (IBG) is an insurance policy that covers the original guarantee provided by an installer or contractor. IBGs are typically used in contracts for roofing, flooring, underpinning, and other building works.
The period of cover for an IBG should be equal to the maximum guarantee period provided by the installer or contractor. This can range from two to ten years, with the maximum period of cover being ten years. An insurance policy cannot exceed the guarantee provided by the installer or contractor. If a policy is purchased for a shorter period, the cover will last for the maximum period provided on the issued policy.
IBGs provide cover in the event that the original installer or contractor ceases to trade and is unable to honour its guarantee. This includes situations where the company has dissolved, gone bankrupt, or voluntarily ceased trading. In such cases, the IBG ensures that the terms of the original guarantee will still be honoured.
It is important to note that IBGs do not typically cover remedial works undertaken without the prior consent of the insurer. Additionally, there may be exclusions or specific conditions outlined in the policy that should be carefully reviewed. The transferability of the guarantee is also an important consideration, especially if the property is sold or transferred to a new owner.
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Frequently asked questions
Yes, IBGs can be transferred to the new owner or homeowner of a property. This is applicable if the installer's written guarantee is transferable. There may be a small admin charge for the transfer.
An IBG provides protection to homeowners and businesses when a contractor fails to complete work to an agreed standard or ceases to trade. It ensures that any repairs required are covered, even if the original contractor is unable or unwilling to resolve the issue.
An IBG policy is activated automatically once the installer has registered the consumer's installation and paid the premium.
