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Construction Industry Insurance Experts

New Build Warranties to Bonds to Insurance Backed Guarantees

What is an 'A' Rated Insurance Company?

The Commercial Warranty Group are often asked what is an ‘A’ rated insurance company.

The industry definition of “A”Rated is as follows .. an “A” rated insurance company is considered one that performs at the top of its industry in creditworthiness (the ability to repay creditors and pay any claims presented) as well as how it performs financially when compared to its peers. The stronger the financial strength of an insurance company, the more likely it is that it will not experience financial failure and perhaps even close its doors. The rating is measured by credit rating agencies, the largest and most respected being Standard and Poor’s, Moody’s, Fitch and A.M. Best.

The importance of an ‘A’ Rated insurer as determined by the 4 main agencies and cannot be undervalued irrespective of whatever you insure, it is vital to have a company you can depend on to be around when it is most needed.

Consumer protection is available but it can be limited. A recent example of this was the bankruptcy of Alpha Insurance in 2018. Alpha were an insurance firm authorised and regulated by the Danish Financial Supervisory Authority operating in the UK on a freedom of services basis which meant that some customers, both private and commercial, based in the UK may have had a policy with the firm. 

Alpha Insurance were “unrated”. An unrated insurance company will often have the capability to provide cheaper premiums. Unfortunately a cheaper price does not always mean you obtain great value. It will probably seem great at the time, but you may not be getting what you paid for, the paying out of claims may be difficult and slow and there is a greater risk of that company going bust compared to one which is rated.

These same risks apply with any business; not just with insurance. This is one of the reasons we offer Insurance Backed Guarantees to contractors such as kitchen fitters, roofers etc so that in the event of major faults in workmanship further down the line you will have peace of mind that you are financially protected should that contractor go out of business.

Going back to Structural Warranties and Alpha Insurance it left potentially over 30,000  new homes and conversions uninsured and cover needs to be taken out retrospectively and as soon as possible before the possibility of structural problems occur. Such issues can cost huge sums of money and without insurance the homeowner will be personally exposed. 

If you have a mortgage and an Alpha policy it’s worth checking the contract to see if you are in breach of your mortgage conditions, additionally you may find you are unable to sell your home if it’s under 10 years old and has no valid structural warranty insurance given the new buyer will likely be unable to get a loan on the property.

The cost of retrospective insurance is higher, but the Commercial Warranty Group have negotiated lower premiums until the end of this year to assist Alpha policyholders.

If you are concerned about your position I would check through the paperwork you received when you bought the property to see if you have an Alpha policy, if so contact the Financial Services Compensation Scheme (FSCS) to check if you are eligible to recover any premium or if there are any alternative options, but if you are stuck and want insurance quickly please do not hesitate in making contact with the Commercial Warranty Group but please note that they will not be able to insure all properties but will always be  happy to advise.

For all of your Structural Warranty and Insurance needs please complete the Enquiry Form above or contact us during normal business hours on 02476 437638.

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