Finishing a project and handing it over to the client does not always mean your exposure ends. Many construction contracts include a defects liability period, which is a defined timeframe after practical completion where the builder remains responsible for addressing certain issues that arise. Understanding how this period works is important from both a contractual and insurance perspective.

The defects liability period is designed to ensure that any faults or issues related to the work can be identified and rectified after completion. These may not be immediately visible at handover and can emerge once the building is occupied or systems are fully in use. During this time, the builder is typically required to return and fix defects that fall within the agreed scope.

Exposure during this period can include:

• Rectification of defective workmanship
• Addressing faults identified after handover
• Responding to client complaints or claims
• Managing potential damage linked to completed works

It is important to recognise that this exposure is different from the construction phase. Contract works insurance generally applies while the project is underway and may cease or reduce once practical completion is reached. After handover, the nature of risk shifts from physical works in progress to liability arising from completed work.

Liability does not end when the job is finished. If a third party suffers damage or loss as a result of your work, a claim can still arise well after completion. This is where liability insurance plays a role, as it is designed to respond to certain claims involving property damage or personal injury linked to your completed operations.

However, not all issues that arise during the defects liability period are covered by insurance. Policies are not designed to cover the cost of fixing defective workmanship itself. Instead, they respond to resulting damage or loss caused by that defect, subject to policy terms.

Common misunderstandings during this period include:

• Assuming insurance will cover the cost of rectifying defects
• Believing liability ends at practical completion
• Expecting contract works cover to apply after handover
• Not understanding the difference between defects and damage

These assumptions can lead to confusion if issues arise after the project has been completed. The key distinction is between the defect itself and the consequences of that defect. Insurance may respond to the consequences, but not the cost of correcting the original error.

To manage this period effectively, it is important to review both your contractual obligations and your insurance structure.

Key considerations include:

• Understanding the duration and scope of the defects liability period
• Ensuring liability cover remains appropriate for completed works
• Clarifying what your policy covers in relation to resulting damage
• Keeping records of completed works and any rectification undertaken

Taking a structured approach helps ensure that expectations are clear and that your insurance aligns with your ongoing responsibilities.

Final Thoughts

The defects liability period extends your responsibilities beyond project completion. While insurance continues to play a role, it is important to understand what is and is not covered during this time. Liability for completed work can persist, even after handover, and policies are designed to respond to certain outcomes rather than the cost of fixing defects. Reviewing your cover and contractual obligations provides clarity and helps avoid misunderstandings if issues arise later.