NHBC Cover for Contamination

NHBC Cover for Contamination


Author: Sophie Wilkinson

NHBC Standards provide the technical benchmark for all newly-built homes registered with it, and include a land quality standard.

In addition, NHBC Buildmark cover provides specific protection relating to contamination.

So to what extent are homeowners protected?

Years 1 and 2
During the first two years following completion, the developer is responsible for investigating any claims arising, and rectifying any 'damage' or 'defect', which may include contamination if there has been breach of a mandatory NHBC requirement (for example the technical standard relating to land quality).

NHBC only has obligations where the developer defaults and where it has been notified of the damage or defect. In this case it must:
. pay costs of tests, investigations and works that the developer does not complete
. if the developer is insolvent, pay the cost of work for which the developer is liable
. if the developer does not pay within a reasonable time, pay costs for which the court or an arbitrator finds the developer liable and has failed to fulfil, or such part of the amount that the NHBC considers reasonable to attribute to the developer's failure

NHBC also offers a dispute resolution service where it considers it can assist in resolving a dispute between the homeowner and the developer.

Cover in relation to contamination - and certain other stipulated defects - is limited to the original purchase price up to a maximum £1m for newly-built homes, and £500,000 for newly-converted or newly-renovated homes. If the home is part of a development, the aggregate liability of NHBC for all homes is £20m.

Years 3 to 10
NHBC provides cover in years 3 to 10 of the policy if there is contamination on the property and a statutory notice has been served or is likely to be served under the contaminated land regime.

However, the following limitations apply:
. the same financial limits apply as in years 1 and 2
. there is no cover if the policy holder has or could have notified the developer or the NHBC in years 1 and 2
. the statutory notice must be served on the policy holder (therefore if the property is designated as contaminated under the contaminated land regime, but a statutory notice is served on the polluter rather than the homeowner, the cover will not apply despite the likely effect on the home's value)
. contamination migrating to the property after completion is not included
. there is no cover for work needed to land that is not part of the property
. there is no cover if the first owner knew or ought reasonably to have known that the contamination was present and could result in the issue of a statutory notice

Making a claim
Where contamination is discovered or suspected, the best advice is to make a notification as soon as possible.

In years 1 and 2, both the developer and the NHBC should be notified. In years 3 to 10, the NHBC alone should be notified.

NHBC must be given the opportunity to inspect the property and has the right to be provided with all relevant documentation and information.