Insurance Policy for Off-Plan Properties
What defects does an off-plan insurance policy cover?
In accordance with article 4 of legislative decree 122/2005, a construction company must provide off-plan property buyers with an insurance policy.
Essentially, this is a guarantee which covers any serious construction defects. The guarantee should provide 10 years of cover.
Off-plan buyers should obtain the insurance policy when the transfer of ownership takes place.
Because by law, a notary public must handle completion of Italian property conveyancing, we would advise you to request that the notary explicitly references the insurance policy in your deed of sale.
What constitutes a serious construction defect?
The notion of serious construction defects has developed substantially over time. This is thanks, in large part, to jurisprudence. Originally, the notion only included defects involving prejudice to the safety and stability of the property.
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However, nowadays, the notion has a wider meaning. It therefore includes all defects that can be defined as provoking significant detriment to the use of the property. Consequently, the guarantee should cover any damage that might impact the owner’s regular, day-to-day use of the property.
Does the insurance policy also cover the use of poor quality materials?
If the construction defect impacts on the regular use of the property, it may involve secondary elements of the construction. Thus, if the fault inhibits an owner’s ability to live in the property and implies maintenance work, the use of poor or inadequate materials may also constitute a serious defect.
For example, floor tile detachment in some areas of a property may constitute a slip and fall hazard. Another example could be poor sealing of the roof which allows water ingress. Both examples clearly demonstrate that the notion of serious construction defects is quite broad.
Who can make a claim on an off-plan insurance policy?
The law limits the right to make a claim on a serious defect insurance policy to buyers who are private individuals. According to a more restrictive interpretation of the law, the buyer should be a “consumer”. In other words, an owner can only claim on the insurance policy if they purchased the property for personal use. The insurance policy excludes tenanted, entrepreneurial or professional use of the property.
There are many risks related to buying off-plan property in Italy. We have written a number of posts on the subject, which you can access using our search tool.
Off-plan property purchases in Italy are complex. There are many hidden risks. We would therefore always advise that you seek independent legal advice before signing any documents or paperwork.
De Tullio Law Firm can advise and guide you throughout your Italian property purchasing journey. We have over 55 years of experience working with clients on their Italian and cross border property, family and inheritance matters. Get in touch.
For more comprehensive information about the Italian property purchasing process, you might like to read our guide. You may also like to watch our info videos about Italian property law.
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