SiteKiln gives you plain-English information, not personal insurance, financial or legal advice. If you need advice specific to your situation, talk to a qualified insurance broker or warranty specialist.
6.8.1 The short version
Warranty and guarantee insurance is about backing up your promises to the client if you go bust or disappear. Insurance-backed guarantees (IBGs) sit behind your own written guarantee and promise the customer that, if you cease trading, an insurer will step in for defects covered by that guarantee for a set period.
Deposit protection insurance does a similar job at the start of the job: it protects the client's up-front payment if you go under before the work is done. On new homes, structural warranty schemes like NHBC Buildmark bundle deposit protection and 10-year structural cover together as standard.
6.8.2 Why it matters
From a homeowner's point of view, your guarantee is only worth something if you are still around to honour it. If you shut the company, retire or go bust, a basic "10-year guarantee" on paper is wallpaper. An IBG or structural warranty is what makes that promise survive you.
It also changes how you look compared with the next builder. Being able to say "your deposit is protected" and "your guarantee is insurance-backed / you have a 10-year structural warranty" is a big trust signal and, in some sectors (roofing, waterproofing, basements, new build), increasingly expected.
6.8.3 Insurance-backed guarantees (IBGs) -- what they are
An IBG is a project-specific insurance policy that sits behind your written guarantee.
Key points:
- The client first has your normal workmanship/materials guarantee (for example 10 years on a flat roof).
- If a covered defect appears and you have ceased trading, the insurer steps in to fund repair or replacement, subject to the IBG terms.
- Cover periods are typically up to 10-12 years, depending on the provider and the type of work.
Common uses in construction and home improvement:
- Roofing (pitched and flat), particularly refurbishment work.
- Basements and structural waterproofing, tanking, damp/timber treatment.
- Piling, underpinning, structural alterations.
- Windows/glazing, external cladding, insulation and solar PV.
IBGs are often tied to trade schemes or accreditation -- for example NFRC roofing schemes or specialist waterproofing installers.
6.8.4 Deposit protection insurance -- what it does
Deposit protection insurance (DPI) protects the customer's deposit if you cease trading before the work is completed.
Typical features:
- Covers deposits up to a set percentage of the contract value (often around 25%, with monetary caps such as £5,000 on some home-improvement schemes).
- If you go bust before or during the job, the insurer compensates the customer for the lost deposit or arranges completion, subject to policy terms.
- Often bundled with an IBG at the end of the job -- some providers issue a 10-year IBG automatically when you notify completion of a contract that had DPI in place.
In the new-build world, structural warranty providers (NHBC Buildmark, Premier, LABC, etc.) also include pre-completion deposit protection up to around £100,000 as part of their standard package for buyers.
6.8.5 New-build structural warranties (NHBC and others)
For new homes, you are in structural warranty territory, not simple IBGs.
Schemes like NHBC Buildmark, Premier Guarantee, LABC Warranty and others generally provide:
- Pre-completion cover: deposit and exchange monies protected if the developer becomes insolvent before completion (often up to £100,000).
- Builder warranty period (Years 1-2): the developer must fix any defects that breach the provider's technical standards; the warranty provider can mediate.
- Structural insurance (Years 3-10): insurance against physical damage caused by defects in key structural elements -- foundations, load-bearing walls, roofs, main structure, below-ground drainage -- usually up to the purchase price or rebuild cost.
Common exclusions:
- Cosmetic issues after year 2, minor shrinkage cracks, wear and tear, homeowner damage.
- Fences, basic landscaping and non-structural fittings (kitchens, appliances, etc., which rely on manufacturer warranties).
These warranties are often required by lenders and are referenced alongside the Consumer Code or similar schemes that set standards for how buyers must be treated.
6.8.6 Typical limits, exclusions and traps
For IBGs and deposit protection on home-improvement style work, watch for:
- Partial contract cover -- some IBGs only cover certain elements (for example waterproofing) rather than the whole job.
- Caps below contract value -- some schemes cap cover per contract; others (including some DPI+IBG combos) will cover the full contract value, but you need to check.
- Installer obligations -- you must register the job, pay the fee and issue the paperwork correctly; fail that admin and the cover may not exist.
- Insolvency trigger -- IBGs usually only respond if you have formally ceased trading; they do not cover you simply refusing to go back.
For structural warranties, traps include:
- Buyers assuming "10-year warranty" covers every defect -- in reality, the broad fix-anything period is usually only the first 2 years.
- Developers not understanding that they are on the hook for all defects in years 1-2 under the technical standards, not just obvious snags.
- Structural insurance only covering defined elements and minimum claim values -- small cracks and cosmetic issues after year 2 are out.
6.8.7 Quick warranty / IBG health check
You are in a better place on warranties and guarantees if:
For any job where you advertise a long guarantee (for example 10-20 years on a roof or basement), you either:
- Are realistically going to be around and solvent for that time, or
- Back it up with an IBG from a recognised provider.
If you take chunky deposits on consumer work, you have a DPI/IBG scheme in place and can show proof of deposit protection if asked.
On new build, you understand exactly what your chosen structural warranty covers in years 1-2 vs 3-10 and can explain that honestly to buyers.
You are not casually promising "10-year guarantee" on things where you have no IBG, no structural warranty and no plan for what happens if the company changes shape.
If any of that feels shaky, that is a conversation with your broker or warranty provider before the next glossy brochure goes out.
6.8.8 What to do next
- If you advertise long guarantees (10+ years), decide whether to back them with an IBG from a recognised provider.
- If you take deposits on consumer work, look into deposit protection insurance so you can prove the deposit is safe.
- On new builds, make sure your chosen structural warranty covers what your buyers (and their lenders) actually expect.
- Register jobs with your IBG provider properly and pay fees on time -- missed admin means the cover may not exist.
6.8.9 Who to contact
- Your insurance broker or warranty provider -- to arrange IBGs, deposit protection or structural warranties (paid)
- FCA Financial Services Register -- fca.org.uk/firms/financial-services-register -- to check your insurer is authorised (free)
- Financial Ombudsman Service -- 0800 023 4567, financial-ombudsman.org.uk -- if you have a complaint about your insurer (free)
- ABI (Association of British Insurers) -- abi.org.uk -- general insurance guidance (free)
- Citizens Advice -- citizensadvice.org.uk -- for homeowner guidance on guarantees and warranties (free)
6.8.10 Sources and legislation
- Consumer Insurance (Disclosure and Representations) Act 2012 -- disclosure duties when arranging insurance. legislation.gov.uk/ukpga/2012/6
- Third Parties (Rights against Insurers) Act 2010 -- third-party rights against insurers in insolvency. legislation.gov.uk/ukpga/2010/10
- Employers' Liability (Compulsory Insurance) Act 1969 -- context for how warranty products sit alongside required covers. legislation.gov.uk/ukpga/1969/57
6.8.11 Related guides on this site
- 6.1 Public liability insurance
- 6.5 Contract works / all risks insurance
- 6.9 Making an insurance claim
- 6.10 Insurance for subcontractors
- 7.15 TrustMark registration
- 7.14 MCS certification -- heat pumps
Know someone who needs this?
Was this guide useful?
Didn't find what you were looking for?
Spotted something wrong or out of date? Email us at hello@kilnguides.co.uk.
In crisis? Samaritans 116 123 ·