An Insurance Backed Guarantee (IBG) is an insurance policy – paid for by the installing contractor – which provides valuable protection for consumers when undertaking home improvement projects.
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- Many contractors will be happy to guarantee their work against defects in workmanship or materials for up to 10 years, which is the period often given by home improvement companies. If a defect arises in the works, the contractor will normally honour their responsibilities by attending to the defect at no cost to you, as set out in their written guarantee.
- Although a contractor’s written guarantee sets out their obligation to rectify defects in installations carried out by them, it cannot guarantee that they will always be around. If a contractor ceases to trade and defects subsequently develop in an installation, the contractor’s written guarantee would be useless, although made in good faith and with the best of intentions.
- An IBG protects the customer if the original contractor ceases to trade for reasons such as liquidation, receivership, administration, or the winding up of the business owing to bankruptcy, retirement, or death. If a fault is discovered in the insured works after the contractor has ceased trading for specified reasons and they are unable to honour their guarantee, then a claim can be initiated.
- An IBG is generally used to provide cover for component parts of a building, including basement, tanking and waterproofing systems, glazing, electrical work, piling systems, external cladding, insulation, and roofing systems.
- IBGs are generally for between 1 and 10 years, which will run from the date of completion of works.
- In the event of a claim, the homeowner would be asked to complete a simple claim form, and a report would then be prepared by another contractor. This would determine the cause of the problem as well as the cost of repair. If the fault falls under the terms of the original contractor’s written guarantee and the terms of the Policy of Insurance, then the IBG would meet the reasonable cost of rectifying the defects up to a limit of the original contract price.
- Deposit protection insurance policies are also available. These are designed to protect the policyholder in the event that the original installer ceases to trade and is, therefore, unable to complete the installation and will provide a contribution up to the deposit amount to allow you to progress with the installation agreed with your original contractor.
- If you identify a defect in your installation or project, you should always first try to make contact with the original installation contractor to advise them of the issue and request they rectify the fault.
- There is no legal requirement for a contractor or installer to offer an IBG. However, it is seen as good practice.
The NHIC wishes to thank WG2 | Consumer Voice members for contributing to this guide.
Please note that this guidance document produced by the NHIC was correct when created. However, information and regulations may have changed since its publication. Therefore, seeking the most up-to-date information and expert advice is always advisable before making any decisions related to Insurance Backed Guarantees.
