Insurance Backed Guarantees (IBGs): What They Are and Why They Matter

Insurance Backed Guarantees (IBGs) are an increasingly common requirement on new build and conversion projects, particularly where specialist construction works are involved. Many developers and contractors first encounter them as a condition within a structural warranty quotation, often late in the process, which can lead to confusion or unexpected delays if they have not been planned for in advance.

Understanding what an Insurance Backed Guarantee is, why it is required, and how to put one in place early can make a significant difference to the smooth progression of a project. In this article, we explain the role IBGs play within the wider warranty environment and why early engagement is so important.

What is an Insurance Backed Guarantee?

At its core, an Insurance Backed Guarantee is designed to protect the building owner if a specialist contractor is no longer able to honour their own guarantee.

When specialist works are completed, such as flat roofing or waterproofing, the contractor typically provides a written guarantee covering workmanship and materials. This written guarantee forms the first line of protection. However, if the contractor ceases trading during the guarantee period, that protection can quickly become meaningless.

An Insurance Backed Guarantee provides a second layer of security. It is an insurance policy that “backs” the contractor’s written guarantee, ensuring that there is still insurance cover available to the beneficiary if the contractor becomes insolvent. In practical terms, this means that defects arising from the specialist works can still be addressed even if the original installer is no longer operating.

IBGs usually run for a minimum period of 10 years, mirroring the contractor’s own guarantee and aligning with the duration of most structural warranties.

Why are IBGs often required?

From an insurer’s perspective, not all elements of a building present the same level of long‑term risk. Certain specialist systems are known to generate a higher proportion of claims, often because failures may not become apparent for several years after completion.

Flat roofs, waterproofing systems and damp‑proofing works are typical examples. If problems arise long after handover, it is not uncommon for the original contractor to have ceased trading. Without insurance backing, this leaves structural warranty insurers exposed to claims with no effective route of recovery.

For this reason, structural warranty insurers frequently require Insurance Backed Guarantees for higher‑risk elements of a project. The IBG provides reassurance that, even in the event of contractor insolvency, there is an additional layer of protection in place.

For building owners, funders and purchasers, IBGs also provide confidence that specialist works have been supported by appropriate long‑term protection, rather than relying solely on the ongoing existence of a contractor.

What type of works typically require an IBG?

Insurance Backed Guarantees are most commonly associated with specialist works, where contractors install specific systems or carry out discrete elements of construction that fall outside general building works.

Examples of works that often require an IBG include:

• Flat roof coverings

• Waterproofing and tanking systems

• Damp-proofing

• Timber and chemical treatments

• Underpinning

• Drainage

• Curtain walling & rainscreen systems

• Certain types of cladding

  
  

This list is not exhaustive, and requirements can vary depending on the specific project and insurer. If you are unsure whether an IBG is needed, it is always best to check at an early stage.

What makes an IBG acceptable for warranty purposes?

A common misconception is that any guarantee (or any insurance‑backed policy) will automatically be acceptable to the warranty provider. In practice, insurers apply very specific criteria.

From a structural warranty perspective, an acceptable Insurance Backed Guarantee should:

• Cover both workmanship and materials, not just one or the other

• Be provided for a minimum period of 10 years

• Clearly define the scope and location of the works covered

• Be issued alongside the contractor’s written guarantee

• Be transferable to future owners within the guarantee period

• Contain fair and reasonable conditions for making a claim

• Not include a non‑contribution clause, which could undermine the cover

Some manufacturer or “single‑point” guarantees are branded as long‑term assurances but do not always include true insolvency backing. These may not be acceptable for warranty purposes unless they are supported by a separate insurance‑backed policy.

Why early confirmation is so important

One of the most common issues we see is Insurance Backed Guarantees being addressed very late in a project — sometimes only as completion approaches. At this point, changing or replacing guarantees can be difficult, and in some cases may delay the issuance of the structural warranty.

By submitting draft guarantees or specimen policy documents early, there is time for review and, if necessary, revision before works are completed. This is particularly important where contractors are using alternative providers or have their own arrangements in place.

Early confirmation ensures that the guarantees meet insurer requirements and helps avoid unnecessary last‑minute pressure on programmes and completion dates.

Key Takeaways

• Insurance Backed Guarantees (IBGs) provide protection if a specialist contractor becomes insolvent and is unable to honour their own written guarantee.

• IBGs are commonly required for higher‑risk specialist works, such as flat roofing, waterproofing, damp‑proofing and timber treatment.

• From a structural warranty perspective, IBGs typically need to cover both workmanship and materials for a minimum period of 10 years.

• Not all guarantees are acceptable - early review is essential to ensure policy wording meets insurer requirements and avoid delays at completion.

• Addressing IBGs early in the project helps reduce risk, protect timescales and ensure smooth completion of the structural warranty.

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How Q can help

Q regularly supports clients with the review and arrangement of Insurance Backed Guarantees as part of the wider structural warranty process. Our team can advise on whether an IBG is required, confirm the suitability of guarantees already in place and assist with sourcing quotations from appropriate providers where needed.

If you need assistance with arranging IBGs for your project, please speak to:

Client Services Team on 0333 577 2800

or email client@qassurebuild.co.uk 

We will be very happy to explain what is required and help ensure everything is in place well ahead of completion.