“Latent defects insurance” is basically a type of insurance covering buildings against loss or damage caused by defective design, bad workmanship and poor materials used when the building is in the course of construction. The construction process of the building usually begin with foundation, floor, wall, column, roof, etc. Not like property all risks insurance, in the latent defect insurance, when a claim occurred, the insurer need not to prove there was a negligence on building architect or design engineer or the building contractor is in breach of contract.

Coverage is also extend to indemnify for loss of profit as a consequential loss caused by a latent defect. So, this insurance will be useful for the building used as commercial business. Some insurers also now tend to offer latent defects insurance for projects retaining existing buildings and for existing buildings including some cover for non-structural components.

For the main consideration in the underwriting process, the insurers must ensure that the final building is fit and appropriate with specification and building design, also the materials used are good quality and the building was constructed by proper method. To meet this requirements, the insurers need to hire a specialized person (i.e civil engineer and architect) who know deeply the technical aspects in building design and construction, able to check the quality of materials used, and regularly monitor the process of construction from the beginning to the end.