Buyers are preparing to move into their new homes in <a href="https://www.urban.com.au/developments/lane-cove-north-nsw-2066">Lane Cove North</a>, with construction now complete on Sterling, the latest development by builder-developer Scion Group.

The five-level project, located at 2 Merinda Street, comprises just 50 one, two, and three-bedroom apartments to an area starved of new apartments.

Designed by <a href="https://www.urban.com.au/architects/design-corp-architects">Design Corp Architects</a>, Sterling’s architecture draws on Lane Cove’s natural surroundings, with a neutral palette, generous balconies, and integrated landscaping.

[smartcode_project:default project_id=136108 project_image_fid=303417]

The family-run Scion took over the build that had already commenced construction, the first time the company had done so since it was founded by Sam Jabbour in the early 1990s.

Their minds were set at ease instantly when they were told the development had Latent Defects Insurance and had undergone the technical inspection service program by reputable industry experts since commencement.

Sebastian Jabbour, Director of Operations at Scion, says it gave the team confidence to take on the project.

“Because we weren’t the developer who had brought on Latent Defects Insurance, we weren’t fully aware of all the benefits that came with LDI,” Jabbour says.

“It was remarkable how thorough the building inspections by the <a href="https://www.urban.com.au/expert-insights/latent-defects-insurance-101-what-is-the-technical-inspection-service-tis-program">Technical Inspection Service</a> were. It meant we had a third party ratifying the part of the build process we weren’t a part of - which was really the driver in us getting involved in the project.”

&nbsp;

[smartcode_project:default project_id=136108 project_image_fid=303415]

<a href="https://www.urban.com.au/news/resilience-latent-defects-insurance">Latent Defects Insurance</a>, an insurance only offered in Australia by Resilience Insurance and taken out on the building rather than by each individual owner, protects apartment buyers from any structural,&nbsp;

LDI offers 10 years of protection against structural or design defects post-completion, providing a level of assurance that is proving to be a game-changer in the off the plan apartment market.

[smartcode_project:default project_id=136108 project_image_fid=303420]

Ray White Projects Western Sydney Managing Director Mark Bernberg, who is handling the sales, says there have been purchasers who are buying because the development has LDI.

"LDI is a true game-changer for the new and off the plan apartment market," Bernberg says.

<a href="https://www.urban.com.au/buildings/sterling-lane-cove-north-2-merinda-street-lane-cove-north-nsw-2066">Sterling</a> has attracted a diverse mix of buyers, including first homebuyers, downsizers, and investors drawn to the area’s lifestyle offering and connectivity.&nbsp;

There are just a handful of apartments remaining in Sterling.

[smartcode_project_cta:default project_id=136108]

Sterling has attracted a diverse mix of buyers, including first homebuyers, downsizers, and investors drawn to the area’s lifestyle offering and connectivity. 



Joel Robinson

Buyers to move into Lane Cove North's first LDI-protected apartment development as Scion wraps up Sterling construction

Latent Defects Insurance (LDI) is a game-changer for anyone looking to purchase a brand-new or off-the-plan apartment in Australia. This insurance policy, which can only be taken out by developers or builders (not individual apartment owners), offers a 10-year warranty on new apartments. It covers the cost of fixing any structural defects that may arise in the building. So far, LDI has seen strong adoption from developers, with companies like <a href="https://www.urban.com.au/developers/deicorp">Deicorp</a>, <a href="https://www.urban.com.au/developers/dasco">DASCO</a>, and <a href="https://www.urban.com.au/developers/urban-property-group">Urban Property Group</a> using it to provide their buyers with added peace of mind when purchasing off-the-plan properties.

I recently had the opportunity to sit down with Corey Nugent, CEO of Resilience Insurance—Australia’s only provider of LDI policies—to discuss the ins and outs of the important coverage.

<h2>How has Latent Defects Insurance (LDI) been received since its introduction in Australia?</h2>

<a href="https://www.urban.com.au/news/resilience-latent-defects-insurance">Latent Defects Insurance</a> is a crucial component for the future of Australia’s built environment. Also known as Decennial Liability Insurance, LDI has been part of the <a href="https://www.urban.com.au/expert-insights/buying/the-evolution-of-latent-defects-insurance-worldwide-and-its-nationwide-availability-in-australia">new development landscape in Europe and other regions</a> for over seven decades. In countries like France, Italy, Spain, and Finland, it is mandatory for all new buildings—whether residential or commercial—to carry LDI coverage.

Since its rollout in Australia, LDI has been very well received by developers, lenders providing financing to those developers, and most importantly, by buyers. It has quickly become an essential tool in building trust and ensuring long-term security for all parties involved.

<h2>In a nutshell, how exactly does Latent Defects Insurance work?</h2>

While Latent Defects Insurance (LDI) involves several components, the overall process is quite straightforward once the policy is in place.

The LDI process begins even before construction starts. As part of the policy, a <a href="https://www.urban.com.au/expert-insights/latent-defects-insurance-101-what-is-the-technical-inspection-service-tis-program">Technical Inspection Service</a> (TIS) assesses the site before work begins. Throughout the construction phase, the TIS regularly visits the site to ensure everything is progressing as planned. If any issues are found, the TIS provides a detailed report outlining the necessary corrections. By having the TIS involved from the outset, the risk of structural defects in the finished building is significantly reduced, addressing potential problems before they arise.

<h2>What happens when the building is completed?</h2>

Once the building is complete, buyers move in, and LDI is applied to their apartment, as well as the entire building structure, for a period of 10 years.

This coverage not only offers peace of mind but can also increase the resale value of the property. Importantly, the policy stays with the apartment, not the owner. So, if an off the plan buyer <a href="https://www.urban.com.au/expert-insights/resilience-latent-defects-insurance-a-catalyst-for-higher-property-valuations-and-resale-confidence">decides to sell within the first 10 years</a>, the remaining coverage is transferred to the new owner.

<h2>How does LDI benefit developers?</h2>

Developers see several key benefits from Latent Defects Insurance. The most obvious is that it makes their project more attractive compared to others that don’t offer LDI. Many buyers are willing to pay more for the assurance that comes with LDI, and developers often see faster sales as a result. Research, including studies by Urban, shows that over 60% of buyers are willing to pay an additional 1.5% for LDI coverage. This premium often more than covers the cost of the policy for the developer. Typically, developers pay about 1.5% of the build cost for the policy. However, if they can secure a higher sale price on their apartments due to the added value of LDI, they end up profiting.

Another benefit is the added appeal LDI gives to a development, positioning it as a more secure investment for potential buyers.

Finally, LDI provides developers with an extra layer of protection through the Technical Inspection Service (TIS). This third-party oversight ensures quality control throughout the build, which could otherwise cost developers hundreds of thousands of dollars in additional personnel.

The TIS helps catch potential issues early, preventing future liabilities.

While the insurance is designed to protect the buyer, it also safeguards the developer. Should any structural, waterproofing, weatherproofing or MEPS (mechanical, electrical or plumbing systems) issues arise, the developer is covered for out-of-pocket costs. Developers understand the importance of completing projects smoothly and moving on to the next one without lingering problems. Given the large number of trades involved in constructing new buildings, LDI offers significant peace of mind.

<h2>How does LDI benefit buyers?</h2>

In Sydney, past incidents like the Mascot and Opal Towers issues have left many buyers wary of off the plan purchases. While these events occurred over six years ago, they still impact buyer confidence today. However, the new development market is much stronger now, with stricter checks and regulations in place.

Ultimately, Latent Defects Insurance provides protection for all parties. In rare extreme cases, where residents may need to vacate due to major defects, LDI offers first-right protection, ensuring buyers are financially covered. Thanks to the continuous inspections carried out by TIS throughout the construction process, such situations are unlikely to occur, but LDI is there as a safety net if they do.

Since its rollout in Australia, LDI has been very well received by developers, lenders providing financing to those developers, and most importantly, by buyers

Latent Defects Insurance 101: Five minutes with Resilience Insurance CEO Corey Nugent on Australia's most comprehensive new apartment development insurance

Builder-developer&nbsp;<a href="https://www.urban.com.au/developers/scion">Scion Group</a>&nbsp;has officially broken ground on its new development that will reinvigorate an underutilized block of land just off Station Street.

Scion held a groundbreaking ceremony to mark the occasion which was attended by industry partners.

The development, Chatham, at 2-6 Chatham Road, will feature 62 apartments across a six-level building designed by MX Architects. The building will activate the street level with four retail spaces that will complement the wider local area.

<img alt="Chatham" data-entity-type="file" data-entity-uuid="220879ad-2d40-458f-bbf2-edddeea9b396" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-04-01%20at%202.45.57%E2%80%AFPM.png?VersionId=2zAb7AzTF9yikEZhfA_.csF8KAX.BhO6" />

There will be around 860 sqm of communal open space for residents, across the ground floor and rooftop, which will include terrace decking, seating, and barbecue facilities.

&nbsp;

&nbsp;

The site, formerly home to a service station, carwash, and mechanical workshop, underwent extensive remediation before construction. Scion acquired the land in 2021 for $14.1 million, securing a position with frontages to Chatham Road, Dickson Avenue, and Dickson Lane.

<img alt="Chatham" data-entity-type="file" data-entity-uuid="59e8d604-be31-4a20-a2c1-9df2c8677b84" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-04-01%20at%202.46.02%E2%80%AFPM.png?VersionId=9dBYZMIg53z6f5JaFtHqs8not71CjT6s" />

<a href="https://www.urban.com.au/new-apartments/chatham-west-ryde-2-6-chatham-road-west-ryde">Chatham</a>&nbsp;is the first new apartment development in&nbsp;<a href="https://www.urban.com.au/developments/west-ryde-nsw-2114">West Ryde</a> with the new 10-year Latent Defects Insurance offered by Resilience Insurance.

The insurance, which is taken out by the developer, protects apartment owners for any structural or waterproofing issues that may occur within the first 10 years of the building's completion.

Read more:&nbsp;<a href="https://www.urban.com.au/news/what-is-latent-defects-insurance-and-is-it-bringing-confidence-to-the-off-the-plan-apartment-market">What is Latent Defects Insurance and is it bringing confidence to the off the plan apartment market?</a>

It is the second project where Scion, a family-run builder-developer with over three decades of experience, has been able to give LDI to its residents.&nbsp;

They're soon to complete The Sterling in Lane Cove North, the first development in that area to have LDI.

Chatham is expected to complete in 2026.

&nbsp;

[smartcode_project_cta:default project_id=134269]

Scion breaks ground on Chatham, West Ryde's first new apartment development backed by Resilience Latent Defects Insurance

For property stakeholders - whether owners, investors, builders or developers - ensuring comprehensive protection against potential risks is crucial.

Strata insurance and <a href="https://www.urban.com.au/news/resilience-latent-defects-insurance">Resilience LDI</a> play essential roles in safeguarding property investments but understanding the critical distinctions between them is necessary to avoid coverage gaps that can lead to financial stress and lengthy litigation.

<h2>Strata Insurance: Essential but Limited Coverage</h2>

Strata insurance is specifically designed for strata-titled properties, covering shared spaces like lobbies, stairwells, walls, floors, and ceilings. It protects against incidents such as fire, water ingress, accidental damage, and public liability, ensuring that common areas can be repaired or rebuilt in the event of a covered loss.

However, strata insurance doesn’t cover (amongst other things) structural issues stemming from construction flaws. This is where latent defects insurance (LDI) becomes crucial, providing coverage that strata insurance alone cannot offer.

<h2>Resilience LDI: Addressing Structural Risks</h2>

Resilience LDI, also known as structural defects insurance, offers protection for structural issues that may surface after construction is complete. These hidden defects, which may not be immediately visible, can emerge over time, leading to serious safety concerns, costly repairs, and complex legal disputes. Resilience LDI helps cover the expense of fixing these defects, sparing property stakeholders from significant financial and legal burdens.

<h2>The Consequences of Coverage Gaps: Real-World Examples</h2>

The costly impact of not having Resilience LDI is evident in Australia’s high-profile cases like Opal Tower and Mascot Towers. While both Opal Tower and Mascot Towers had strata insurance, which would have provided assistance for immediate risks like fire or storm damage, the absence of Resilience LDI left owners with mounting repair bills and protracted legal battles.

When structural defects surfaced at Opal Tower, residents were evacuated over concerns about the building’s integrity. Strata insurance covered some of their short-term costs, but the deeper structural issues required more comprehensive coverage - exactly what Resilience LDI would have provided.

Similarly, Mascot Towers faced structural issues that led to prolonged evacuations, forcing owners to navigate both the financial burdens and extensive legal processes to address the defects.

Read more:&nbsp;<a href="https://www.urban.com.au/news/nsw/what-would-have-happened-if-mascot-towers-had-resilience-latent-defects-insurance">What would have happened if Mascot Towers had Resilience Latent Defects Insurance</a>

<h2>Avoiding Financial and Legal Stress: The Need for Both Insurance Types</h2>

For a comprehensive approach, property stakeholders should consider combining strata insurance for common area protection with Resilience LDI for structural integrity on new builds. This dual approach provides robust coverage, helping to avoid expensive repairs and minimising the risk of drawn-out legal disputes. Understanding the distinctions between strata and Resilience LDI empowers stakeholders to make informed decisions that protect investments from unforeseen risks, costly repairs, and lengthy litigation.

This comprehensive guide highlights the essential differences between strata insurance and Resilience latent defects insurance (LDI), underscoring the risks of inadequate coverage

Strata Insurance vs Latent Defects Insurance: Closing the coverage gaps for property stakeholders

Latent Defects Insurance (LDI) is a game-changer for anyone looking to purchase a brand-new or off-the-plan apartment in Australia. This insurance policy, which can only be taken out by developers or builders (not individual apartment owners), offers a 10-year warranty on new apartments. It covers the cost of fixing any structural defects that may arise in the building.

So far, LDI has seen strong adoption from developers, with companies like Deicorp, DASCO, and Urban Property Group using it to provide their buyers with added peace of mind when purchasing off-the-plan properties.

I recently had the opportunity to sit down with Corey Nugent, CEO of <a href="https://www.urban.com.au/news/resilience-latent-defects-insurance">Resilience Insurance</a>—Australia’s only provider of LDI policies—to discuss the ins and outs of the important coverage.

<h2>How has Latent Defects Insurance (LDI) been received since its introduction in Australia?</h2>

Latent Defects Insurance is a crucial component for the future of Australia’s built environment.

Also known as Decennial Liability Insurance, LDI has been part of the new development landscape in Europe and other regions for over seven decades. In countries like France, Italy, Spain and Finland, it is mandatory for all new buildings—whether residential or commercial—to carry LDI coverage.

Since its <a href="https://www.urban.com.au/expert-insights/buying/the-evolution-of-latent-defects-insurance-worldwide-and-its-nationwide-availability-in-australia">rollout in Australia</a>, LDI has been very well received by developers, lenders providing financing to those developers, and most importantly, by buyers. It has quickly become an essential tool in building trust and ensuring long-term security for all parties involved.

<h2>What happens when the building is completed?</h2>

Once the building is complete, buyers move in, and LDI is applied to their apartment, as well as the entire building structure, for a period of 10 years. This coverage not only offers peace of mind but can also increase the resale value of the property. Importantly, the policy stays with the apartment, not the owner.

So, if an off the plan buyer decides to sell within the first 10 years, the remaining coverage is transferred to the new owner.

<h2>How does LDI benefit developers?</h2>

Developers see several key benefits from Latent Defects Insurance. The most obvious is that it makes their project more attractive compared to others that don’t offer LDI. Many buyers are willing to pay more for the assurance that comes with LDI, and developers often see faster sales as a result. Research, including studies by Urban, shows that over 60 per cent of buyers are willing to pay an additional 1.5 per cent for LDI coverage. This premium often more than covers the cost of the policy for the developer.

Typically, developers pay about 1.5 per cent of the build cost for the policy. However, if they can secure a higher sale price on their apartments due to the added value of LDI, they end up profiting. Another benefit is the added appeal LDI gives to a development, positioning it as a more secure investment for potential buyers.

Finally, LDI provides developers with an <a href="https://www.urban.com.au/expert-insights/latent-defects-insurance-101-what-is-the-technical-inspection-service-tis-program">extra layer of protection through the Technical Inspection Service (TIS)</a>. This third-party oversight ensures quality control throughout the build, which could otherwise cost developers hundreds of thousands of dollars in additional personnel. The TIS helps catch potential issues early, preventing future liabilities.

While the insurance is designed to protect the buyer, it also safeguards the developer. Should any structural, waterproofing, weatherproofing or MEPS (mechanical, electrical or plumbing systems) issues arise, the developer is covered for out-of-pocket costs. Developers understand the importance of completing projects smoothly and moving on to the next one without lingering problems. Given the large number of trades involved in constructing new buildings, LDI offers significant peace of mind.

<h2>How does LDI benefit buyers?</h2>

In Sydney, past incidents like the Mascot and Opal Towers issues have left many buyers wary of off the plan purchases. While these events occurred over six years ago, they still <a href="https://www.urban.com.au/news/what-is-latent-defects-insurance-and-is-it-bringing-confidence-to-the-off-the-plan-apartment-market">impact buyer confidence today</a>. However, the new development market is much stronger now, with stricter checks and regulations in place. Ultimately, Latent Defects Insurance provides protection for all parties.

In rare extreme cases, where residents may need to vacate due to major defects, <a href="https://www.urban.com.au/expert-insights/building/the-advantages-of-first-resort-strict-liability-latent-defects-insurance-for-off-the-plan-property-buyers">LDI offers first-right protection</a>, ensuring buyers are financially covered. Thanks to the continuous inspections carried out by TIS throughout the construction process, such situations are unlikely to occur, but LDI is there as a safety net if they do.

Latent Defects Insurance 101: How off the plan developers and buyers both benefit from Resilience Insurance LDI

When the development team at Scion was offered the opportunity to acquire an apartment project in Lane Cove North that was half-built, they had to be sure they knew what they were getting in for.

It was the first time the developer, which has its own building arm, was taking over a building that had already commenced construction.

[smartcode_project:default project_id=136108 project_image_fid=303412]

Their minds were set at ease instantly when they were told the development had Latent Defects Insurance and had undergone the technical inspection service program by reputable industry experts since commencement. Sebastian Jabbour, Director of Operations at Scion, says it gave the team confidence to take on the project.

“Because we weren’t the developer who had brought on Latent Defects Insurance, we weren’t fully aware of all the benefits that came with LDI,” Jabbour says.

“It was remarkable how thorough the building inspections by the Technical Inspection Service were. It meant we had a third party ratifying the part of the build process we weren’t a part of - which was really the driver in us getting involved in the project.”

Scion is approaching completion of The Sterling, the first development in Lane Cove North with LDI. The 50 one, two and three-bedroom apartments which start from $750,000.

[smartcode_project:default project_id=136108 project_image_fid=303417]

Jabbour says he was also surprised as to how much impact it had on buyers, a sentiment echoed by Mark Bernberg, Ray White Projects Western Sydney Managing Director.

“We’ve got purchases who are literally buying because of LDI,” Bernberg says.

Scion’s experience with Latent Defects Insurance has seen them take it out on their upcoming new development, Chatham West Ryde, which will also be the first new apartment project in West Ryde with LDI.

[smartcode_project_cta:default project_id=136108]

Sebastian Jabbour says he was also surprised as to how much impact it had on buyers, a sentiment echoed by Mark Bernberg, Ray White Projects Western Sydney Managing Director.

Sterling success: How LDI boosted confidence for Scion and its buyers in Lane Cove North

The construction industry demands meticulous attention to quality and compliance, and the Technical Inspection Service (TIS) has emerged as a critical component in achieving these standards.

Designed to assess and enhance building quality, the TIS program plays a pivotal role in reducing risks, securing <a href="https://www.urban.com.au/news/resilience-latent-defects-insurance">Resilience Latent Defects Insurance</a> (LDI), and ensuring long-term confidence in construction projects.

Unlike traditional certification systems, the TIS sits above existing frameworks, providing an independent, comprehensive layer of quality assurance. By proactively identifying and rectifying potential issues during the construction process, the TIS sets a new benchmark for industry accountability.&nbsp;

Read more:&nbsp;<a href="https://www.urban.com.au/news/what-is-latent-defects-insurance-and-is-it-bringing-confidence-to-the-off-the-plan-apartment-market">What is Latent Defects Insurance and is it bringing confidence to the off the plan apartment market?</a>

<h2>What is the Technical Inspection Service (TIS)?</h2>

The TIS program is an independent, third-party review process that monitors and evaluates a building’s design and construction. Its purpose is to ensure compliance with local codes, regulations and best practices, while also addressing risks that other systems might overlook. By integrating regular inspections and detailed assessments into every stage of construction, the TIS significantly reduces the likelihood of latent structural defects—issues that become apparent only after project completion.

This proactive approach is a mandatory requirement for obtaining Resilience LDI, which provides 10 year protection for property owners against hidden structural and waterproofing defects.

<h2>How the TIS Sits Above Traditional Systems</h2>

While standard certification systems focus on verifying compliance with minimum regulatory requirements, the TIS goes beyond by offering a deeper and more comprehensive review of the construction process. Key distinctions include:

- Independent Oversight: Unlike certifiers who may work closely with project teams, the TIS providers operate independently, ensuring unbiased and rigorous assessments.

- Enhanced Quality Assurance: the TIS program focuses on potential risks that may not be detected by standard certifiers, such as detailed evaluations of waterproofing, structural integrity, and geotechnical considerations.

- Integrated Risk Management: By addressing risks proactively, the TIS complements and strengthens existing certification processes, adding a robust layer of oversight.

<h2>Key Components of the TIS Program</h2>

1. Design Risk Assessment 
 
Before construction begins, the TIS provider conducts a comprehensive review of the project’s plans, specifications, and structural designs. This ensures that potential flaws are identified and resolved at the earliest stage, preventing issues from arising during or after construction.

2. Regular Site Inspections 
 
Throughout the construction process, the TIS program involves regular spot audits and scheduled inspections at critical milestones. These inspections verify that the building adheres to the approved plans and meets the highest quality standards. Issues are identified and corrected in real-time to minimise delays or risks.

3. Detailed Quality Assurance Reporting 
 
Each inspection is followed by a detailed report, providing transparency and actionable recommendations. These reports are shared with project teams, ensuring any concerns are promptly addressed and resolved.

4. Final Completion Review 
 
At the end of construction, a final detailed review is conducted to certify that the building meets all requirements for Resilience LDI coverage. This certification provides the assurance needed to secure the policy.

<h2>The Added Benefit: 10 Years of Protection</h2>

One of the most compelling aspects of the TIS program is the 10-year protection it provides through its alignment with Reslience LDI. This long-term coverage ensures that any structural and waterproofing issues missed during the construction and inspection phases are addressed without financial burden on property owners.

For buyers, developers, and financiers, this decade-long protection adds a layer of confidence rarely matched by traditional systems. Knowing that issues arising years later will be covered fosters trust in the project and enhances its value in the market.

<h2>How the TIS Program Facilitates Resilience LDI</h2>

Resilience LDI provides property owners with coverage for latent defects, such as structural or waterproofing issues, that may emerge years after project completion. To qualify for Resilience LDI, compliance with the TIS program is mandatory. By addressing potential risks and certifying the quality of construction, the TIS program ensures that projects meet the stringent requirements necessary for Resilience LDI coverage.

<h2>Why Developers Should Embrace TIS</h2>

- Enhanced Marketability: Projects with TIS-backed, Resilience LDI coverage are viewed as safer investments, attracting buyers and investors who prioritise quality and risk mitigation.

- Streamlined Risk Management: The independent, proactive approach of the TIS program reduces the likelihood of costly repairs, legal disputes or reputational damage.

- Higher Valuations: Properties backed by Resilience LDI often achieve higher market valuations due to their perceived quality and reduced risk profile.

- Improved Buyer Confidence: The 10-year protection provided by Resilience LDI reassures buyers, making properties more appealing and easier to sell.

<h2>TIS: A Step Toward Better Industry Standards</h2>

The Technical Inspection Service represents a significant shift in how the construction industry approaches quality assurance. By providing a rigorous, independent layer of oversight that complements existing systems, the TIS program ensures that projects meet the highest standards of safety, durability, and reliability.

For developers, embracing the TIS program isn’t just about meeting insurance requirements—it’s about building trust, enhancing marketability, and delivering long-term value. As the Australian construction industry evolves, Resilience LDI and the TIS program will play a crucial role in shaping a future defined by accountability, quality, and confidence.

Resilience LDI may be the safety net, but the Technical Inspection Service is the foundation that makes it possible. Together, they represent the future of construction assurance.

The TIS program is an independent, third-party review process that monitors and evaluates a building’s design and construction

Latent Defects Insurance 101: What is the Technical Inspection Service (TIS) Program

Resilience Latent Defects Insurance (LDI) is not just an essential safeguard for structural integrity—it’s becoming a defining factor in how properties are valued, sold, and perceived in the market.

With Australia witnessing a gradual adoption of Resilience LDI, insights from international markets reveal a clear trend: properties with LDI sell faster, command higher prices and maintain stronger resale values.

This shift is beginning to reshape valuation assessments and market dynamics across the Australian property sector.

The Impact of LDI on Property Valuations

In countries where LDI is well-established, such as the UK, Saudi Arabia, USA and France, properties backed by LDI consistently demonstrate higher valuations compared to those without. The reasons are clear:

- Reduced Financial Risk: LDI protects against costly latent defects, offering buyers peace of mind that any structural issues will be covered without financial disruption.

- Enhanced Buyer Confidence: Knowing that a property is backed by LDI assures buyers of its quality and reduces hesitation during the purchasing process.

- Stronger Financing Terms: Properties with LDI are often viewed more favourably by financiers, enabling smoother and faster transactions.

In the UK, residential developments with LDI sell faster than those without, with a price premium of four to five per cent, depending on location and building type. This demonstrates the strong correlation between LDI and marketability.

Faster Sales and Higher Prices

LDI-backed properties have a significant competitive advantage in the marketplace. These projects:

- Attract More Buyers: With concerns about structural and waterproofing issues removed, buyers are more willing to invest in LDI-backed properties, particularly in high-density developments.

- Sell Quicker: The assurance LDI provides reduces the decision-making time for buyers, allowing properties to move faster through the sales pipeline.

- Achieve Premium Pricing: Buyers are often willing to pay more for the assurance that LDI offers, viewing it as a long-term investment in quality and reliability.

Australian developers who integrate Resilience LDI into their projects are already beginning to see similar trends. In a market where buyer caution has grown due to high-profile defect cases, Resilience LDI offers a competitive edge.

Robust Resale Values

LDI doesn’t just impact the initial sale of a property—it also has long-term implications for resale value. Properties with LDI maintain stronger resale prices for several reasons:

- Continued Coverage: LDI policies provide coverage for 10 years, giving subsequent buyers the same peace of mind as the original purchasers.

- Perceived Quality: The presence of LDI signals a higher standard of construction, which translates into higher buyer confidence even years after completion.

- Lower Risk for Investors: For property investors, the reduced risk associated with latent defects ensures that the property remains a stable and attractive asset.

The Australian Context: A Shift in Valuation Assessments

Australia’s valuation assessments are beginning to reflect the influence of Resilience LDI. Properties with Resilience LDI are increasingly being viewed as lower-risk investments, prompting valuers to assign higher values compared to similar projects without such coverage. This shift is particularly notable in:

- Multi-Residential Developments: Given their complexity and higher risk of defects, Resilience LDI-backed projects in this segment are gaining a significant valuation boost.

- High-Density Housing: Buyers and investors in high-density developments are prioritising properties with LDI, pushing demand—and valuations—higher.

Lessons from International Markets

In the UK, LDI-backed developments not only sell faster but also face fewer legal disputes post-sale, which further bolsters buyer and investor confidence. Similarly, France’s mandatory decennial liability insurance for new builds has created a market where properties with coverage enjoy better resale performance and stronger demand.

These international experiences provide a roadmap for Australia’s emerging LDI market. As developers, financiers and buyers increasingly recognise the value of Resilience LDI, its adoption is expected to become a standard for high-quality developments.

The Future of LDI in Australia

As Resilience LDI becomes more prevalent, its benefits will continue to shape the property market. Developers who adopt Resilience LDI for their projects can expect:

- Faster Sales Cycles: Properties with Resilience LDI will move through the market more efficiently, reducing holding costs and enhancing profitability.

- Higher Valuations: The assurance of defect coverage will drive demand, pushing prices higher for both initial sales and resales.

- Stronger Buyer Loyalty: Buyers who experience the benefits of Resilience LDI-backed properties are likely to return for future projects by the same developer.

For buyers, Resilience LDI offers unparalleled peace of mind, while for developers, it provides a critical differentiator in an increasingly competitive market.

A Win-Win for All Stakeholders

Latent Defects Insurance is no longer just a safety net—it’s a value driver. For developers, it’s a way to build trust, ensure faster sales, and command higher prices. For buyers, it’s a guarantee of quality and protection against unforeseen costs. And for the Australian property market, it’s a step toward a more accountable and resilient future.

The message is clear: Resilience LDI-backed projects are the future of Australian real estate. Developers who embrace this shift will not only see immediate benefits in valuation and sales but also build lasting trust with buyers and investors.

The game-changing insurance not only protects properties but also enhances their marketability, helping builders, developers and homeowners unlock greater value

Resilience Latent Defects Insurance: A catalyst for higher property valuations and resale confidence

In the construction and property industries, insurance is vital to protecting stakeholders from financial risks. However, not all insurance policies are created equal, and the differences between them can sometimes lead to confusion.

<a href="https://www.urban.com.au/news/resilience-latent-defects-insurance">Resilience Latent Defects Insurance</a> (LDI) is one policy often misunderstood, particularly when compared to strata insurance, construction insurance, professional indemnity (PI) insurance, as well as many others.

A common misconception is that Resilience LDI offers duplicate coverage to other policies, particularly strata insurance. This misunderstanding can leave property owners, builders, and developers underprepared for the unique risks that only Resilience LDI addresses. In this article, we’ll explore how Resilience LDI differs from these other insurances, clarifying why it’s an essential safeguard for construction projects.

<h1>What is Resilience LDI?</h1>

Resilience LDI is a first-resort strict liability policy that covers physical loss or damage to new buildings caused by hidden structural and waterproofing defects. These defects, which may arise from flaws in design, materials, or workmanship, often become apparent years after construction is complete. LDI typically provides coverage for up to 10 years from the date of practical completion.

Unlike other types of insurance, Resilience LDI:

Covers defects: It doesn’t require a determination of fault, allowing for swift resolution 
Protects property owners directly: Coverage applies regardless of whether the original builder or developer is still operating. 
Focuses on structural elements: Its scope includes foundations, load-bearing walls, and waterproofing, among other critical components.

<h1>How Resilience LDI differs from other insurances</h1>

1. Strata Insurance 
 
Strata insurance is often mistakenly thought to provide the same coverage as Resilience LDI. However, the two serve entirely different purposes.

Strata Insurance: Protects common property in a strata scheme, such as roofs, lobbies and shared amenities, against risks like fire, flood and accidental damage. It does not cover structural waterproofing defects. 
 
Resilience LDI: Covers hidden defects in the building’s structure and waterproofing, ensuring that property owners are protected from significant repair costs years after construction. 
 
Key Difference: Strata insurance manages external risks and day-to-day maintenance, while Resilience LDI addresses hidden construction flaws.

2. Construction Insurance 
 
Construction insurance, also known as contract works insurance, protects against risks during the building phase. 
 
Construction Insurance: Covers damage to the site, materials, and equipment during construction due to events like theft, fire, or weather. It also protects against delays caused by these incidents.

Resilience LDI: Comes into effect after the project is complete, protecting against unforeseen structural and waterproofing issues. 
Key Difference: Construction insurance is limited to risks and patent defects discovered during the building phase, while Resilience LDI provides post-completion protection and coverage for latent defects.

3. Professional Indemnity (PI) Insurance 
 
PI insurance covers professionals, such as architects, engineers, and consultants, against claims of negligence or errors in their work. 
 
PI Insurance: Focuses on liability, compensating for financial losses caused by professional mistakes.

Resilience LDI: Addresses physical defects and their repair, without requiring proof of professional negligence. 
 
Key Difference: PI insurance is liability-based, while Resilience LDI is a no-fault policy ensuring immediate action on defects.

4. Liability Insurance

Liability insurance protects builders, developers, and contractors against claims for bodily injury or property damage caused during construction. 
 
Liability Insurance: Covers legal and compensation costs if someone is injured on-site or if the work causes damage to neighbouring properties. 
 
Resilience LDI: Covers structural and waterproofing issues that arise years later, with no need for a liability claim. 
Key Difference: Liability insurance handles claims during or immediately after construction; Resilience LDI focuses on the building’s structural longevity.

5. Landlord Insurance 
 
Landlord insurance covers risks associated with leasing a property.

Landlord Insurance: Protects landlords from tenant-related risks, including damage to the property, loss of rent, or liability claims from tenants.

Resilience LDI: Covers the structural integrity of the building, not tenancy-related issues. 
 
Key Difference: Landlord insurance is tenancy-focused, while Resilience LDI protects the physical structure itself as well as waterproofing failures.

<h2>Why LDI is not “doubling up”</h2>

Many property owners mistakenly believe that having strata or construction insurance means they don’t need Resilience LDI. This misconception can leave them exposed to significant financial risks.

Strata insurance does not cover defects: If a structural flaw in the building or waterproofing issue causes damage to common property, the cost of repair typically falls back on the owners’ corporation. Resilience LDI steps in to cover these costs. 
 
- Construction insurance is temporary: Once the project is complete, construction insurance no longer applies, leaving a gap in coverage that Resilience LDI fills. 
 
- No reliance on liability claims: Unlike PI or liability insurance, Resilience LDI ensures immediate repair coverage, avoiding delays caused by fault-finding or disputes.

<h2>Who benefits from Resilience LDI?</h2>

For property owners

Resilience LDI provides peace of mind, ensuring they are not burdened with repair or litigation costs for hidden defects years after buying their property.

For Builders and Developers

By including Resilience LDI in their projects, builders and developers can differentiate themselves in the market, demonstrating a commitment to quality and accountability. It also helps protect their balance sheets, offering financial security in the face of potential latent defect claims. Moreover, Resilience LDI-backed projects often experience improved sales velocity and command higher prices, providing a clear competitive edge.

For Financiers

Resilience LDI-backed projects are seen as lower-risk investments, enhancing their attractiveness to financiers.

For OC Managers

Resilience LDI ensures higher building quality through rigorous inspections, provides financial protection with a 10 year warranty for structural and waterproofing defects and simplifies defect resolution by allowing direct claims without the need to prove fault, enhancing the reputation and effectiveness of OC managers

The future of LDI in Australia

As construction standards and buyer expectations continue to rise, Resilience LDI is becoming a crucial part of the insurance landscape. Builders, developers, and property owners need to recognise its unique role in safeguarding against long-term risks. It is not a replacement for other insurances but a necessary addition that fills critical gaps in coverage.

The misconception that Resilience LDI overlaps with strata or other insurances must be dispelled. By understanding the distinct protections Resilience LDI offers, all stakeholders can make informed decisions to secure their investments and protect their reputations.

Resilience LDI isn’t just an option—it’s an essential safeguard for a secure future in construction and property ownership.

Not all construction and property insurances are created equal. Discover why Resilience LDI is a game-changer for builders, developers, property owners, financiers and OC managers - and how it goes beyond strata, construction, PI and landlord insurance.

How Resilience Latent Defects Insurance (LDI) stands apart from other construction and property insurances

The Charles de Gaulle Airport in Paris suffered a catastrophic collapse in 2004. The incident occurred when a section of steel roofing at Terminal 2E crashed down causing 4 people dead and injuries to several passengers. Investigation revealed that the reasons for the collapse were a combination of faulty design and workmanship. After four years of reconstruction, Terminal 2E reopened in March 2008, costing EUR 150 million (AUD 250 million) covered by insurers and reinsurers.

The Charles de Gaulle International Airport is one of the largest airports in the world. As a significant component of the expansion project in 1997, Terminal 2E started to be used in June 2003, with a cost of approximately 750 million euros. The 450-metre-long terminal building is an elliptical tube on parallel longitude beams constructed of 30-centimetre-thick reinforced concrete rings. However, just nine months after its operation, at 7 o’clock in the morning of 23 May 2004, a 30-meter section of glass of the roofing structure collapsed within the boarding area. The incident happened during the early morning hours and left 4 casualties, the consequences could have been more devastating if it occurred during rush hour.

The French Commission for the Administrative Investigation indicated that the structural engineering defects may have been a possible cause of the accident. These issues in structural design were associated with poorly placed reinforced steel, a lack of structure supports, weak outer steel structures and concrete support beams. The Chief architect of the project also released a statement mentioning that weak metal reinforcement in the concrete was the primary factor leading to partial collapse.

The collapse could also be attributed to failures in the construction process. Aéroports de Paris (ADP) was responsible for both designing and constructing this project. It was reported that there were hundreds of stakeholders involved in the work, which largely increased the management complexities. Meeting the project’s proposed timeline posed another challenge for ADP. Consequently, there may have been inadequate supervision of design reviews and site work inspections during the process, resulting in quality issues.

Following the demolition of the existing structure and the construction of a new light steel structure, the terminal reopened to the public in 2008. The estimated cost of the rebuilt project was 150 million euros (AUD 250 million). Since the airport owner had Decennial Liability Insurance (DLI), also known as Latent Defects Insurance (LDI), insurers and reinsurers were to guarantee the payout. DLI/LDI insurance is a mandatory program in France that provides cover against damage caused by defects in design, workmanship or materials affecting the structure, external walls and roofs. In this case, even though the cause of the collapse is unclear, LDI/DLI would still come into effect to facilitate repairs, as it is a strict liability policy.

The collapse of Charles de Gaulle Airport’s Terminal 2E in 2004 was a tragic event that exposed a combination of design and construction flaws. It prompted a re-evaluation of quality control in airport infrastructure projects and highlighted the importance of Latent Defects Insurance in addressing such structural defects-related incidents in the future.

Since the airport owner had Decennial Liability Insurance (DLI), also known as Latent Defects Insurance (LDI), insurers and reinsurers were to guarantee the payout.

Resilience Latent Defects Insurance

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