How to take out decennial insurance and when it comes into force

Insurance that does not cover you from day one

With most insurance, cover begins as soon as the premium is paid. Decennial insurance works differently: it is taken out when the building does not yet exist or is under construction, and its guarantees only take effect once the works have been completed and handed over.

Months or even years may pass between the two, for as long as construction lasts. During that period, a Technical Control Body (OCT) supervises the works so that the insurer knows the risk it is going to take on.

When should decennial insurance be taken out?

For new builds, the insurance is generally applied for before the works begin. The insurer requires the OCT to supervise the works from the design stage or from the start of construction, so it is advisable to request the study before starting.

It is also possible in many cases once the works have started, although it is harder: the OCT must be able to check what has already been built, such as the foundations and the structure, which may require additional documentation or tests, and acceptance depends on the insurer. The earlier it is raised, the more options there are.

Taking out the policy, step by step

1. Application and study. The project details (budget, type of building, location, technical features) are provided so that insurers can assess the risk and offer terms.
2. Pre-policy and D0 report. Once an offer has been chosen, a pre-policy is issued, made up of the insurance application and the OCT’s D0 report, which is its first report on the project. A premium on account is paid at that point.
3. Technical control during construction. The OCT reviews the design and monitors the execution of the works until handover, issuing its reports for the insurer.
4. Handover of the works. Once the works, or a complete phase of them, are finished, the developer and the contractor sign the handover certificate.
5. OCT final report. The OCT issues its final report on the completed works.
6. Entry-into-force endorsement. Once all the documentation has been submitted and the premium paid, the insurer issues the entry-into-force endorsement and cover is activated with effect from the date of the handover certificate.

Documents required for entry into force

To issue the entry-into-force endorsement, the insurer needs to receive the following from the policyholder or the insured:

• The final report of the Technical Control Body.
• The handover certificate, signed at least by the developer and the contractor. It must set out in writing the parties involved, the date of the final completion certificate for the works or for the complete, finished phase, the final material execution cost and the declaration of acceptance with or without reservations. If there are reservations, they must be specified together with the deadline for remedying the defects observed.
• The declaration of the final value of the insured property, sufficiently itemised, which also forms part of the policy. The sum insured is set on the basis of this declaration.
• Payment of the full premium, that is, the part outstanding after the premium on account.

When and how is the premium paid?

The decennial insurance premium is a single premium: it is paid once for the ten years of cover. What changes is the payment schedule:

• If the insurance is taken out at the start of the works, the premium is paid in two instalments. When the pre-policy is formalised, a premium on account is paid, which is part of the total premium, usually a percentage set by each insurer. The rest is paid when the entry-into-force endorsement is issued, after handover of the works.
• If the insurance is taken out once the works are already finished, a single payment is made.

The premium on account is calculated on the sum insured estimated at the outset. The final premium is calculated on the definitive sum insured declared by the policyholder and is set in the entry-into-force endorsement. The factors that affect the amount are explained in the guide on the price of decennial insurance.

When does cover start and how long does it last?

Cover takes effect with the entry-into-force endorsement, and its effective date is the date on which the handover certificate is signed. From that day, the basic structural damage guarantee lasts ten years.

Not all guarantees last the same length of time. Some optional guarantees, such as waterproofing, usually have shorter terms, and with some insurers they do not come into force until an observation period of one year from handover has elapsed and the OCT has issued a favourable report. The different covers are explained in the guide to decennial insurance guarantees.

Phased developments: partial entries into cover

In a development built in phases or block by block, there is no need to wait until the whole scheme is finished. Partial entries into cover can be issued for completed homes or phases, provided that their handover certificate and final completion certificate are available.

As many partial entries into cover can be issued as there are final completion certificates, and each has its own effective date. This means that completed homes can be conveyed by deed and sold with their decennial insurance in force while the rest are being finished.