Modern buildings are becoming increasingly complex, with up to 40% of construction costs relating to the mechanical and electrical services that support them. These mechanical and electrical services can be plagued by defects caused by poor design, materials or workmanship and this can be highly problematic for the owners and occupiers of affected buildings.
A traditional remedy has been the provision of collateral warranties by contractors. But with insolvencies in the construction and real estate sectors running at over 2,600 a year(1) in England and Wales alone, these cannot always be relied upon and can be very difficult and costly to enforce. Increasingly, developers, owners, funders and occupiers are turning to the security and reliability of inherent defects insurances; which is why HSB has developed a market-leading Machinery Inherent Defects Insurance (MIDI) product to meet these risks.
What is Machinery Inherent Defects Insurance?
Available for periods of up to 12 years(2), our policy covers actual or impending damage caused by an inherent defect in insured property that existed prior to practical completion of the building. Additional cover is also available for the loss of rental income suffered as a result of a defect.
The MIDI policy applies to the mechanical and electrical services installed in the building, including:
- Boilers, space heating, ventilation and air conditioning systems
- Lifts and escalators
- Building maintenance units
- Electrical distribution systems
- Equipment used for building security and environmental control
- Electrical and mechanical parts of water pumping, pressurisation and distribution systems
Cover is available for:
- New buildings undergoing construction
- 'Shell and core' building refurbishments
- Completed buildings less than two years old
Technical bulletin: Equipment start-up following an extended shut down period
Why HSB Machinery Inherent Defects Insurance?
Our underwriters and engineers have extensive experience in providing covers for plant and equipment in a vast array of applications and are recognised as experts in this field. Drawing on our considerable engineering expertise, we are able to provide tailored insurance products to meet the needs of developers, owners, funders and occupiers of new commercial buildings:
- Policy wordings specifically designed for mechanical and electrical services in new buildings
- Wordings designed with all interested parties in mind
- Loss of rent cover available on all policies
- Extensive expertise in building services technology
- Access to experienced mechanical and electrical engineers
- Access to specialist claims handlers and loss adjusters
Why choose HSB?
- Leading specialist provider of engineering and technology insurance and inspection services in the UK, Ireland and Europe
- Proactive inspection service carried out by a network of competent, technically-experienced Engineer Surveyors located throughout the UK and Ireland
- UK-based arm of HSB Group, the equipment breakdown insurance and inspection market leader since 1866
- Part of Munich Re, a world leader in risk solutions, consistent risk management and financial stability
- Financially strong and stable – rated A++ (Superior) by A.M. Best Company
- A member of the Institute of Customer Service, demonstrating our commitment to continually improving customer service performance and professionalism