Domestic and commercial insurance-backed guarantees (IBGs) both provide financial protection in the event that a contractor fails to fulfil their obligations. However, they are tailored to different types of projects and clients. Here are the key differences noted below:

Domestic Insurance-Backed Guarantees

Scope:

· Target Market: These guarantees are primarily aimed at residential properties with individual homeowners and the policy would be registered to them directly.

· Typical Use: Commonly used for home improvement works that include double glazing, roofing, damp and timber treatments.

Coverage:

· Duration: Usually range from 2, 5 or 10 years, depending on the type of work and the term that is provided by the installing contractor within their own guarantee.

· Coverage Scope: The IBG covers the customer in the event the installing contractor was to cease trading and there were defects that occurred, due to faulty workmanship.

Regulations:

· Regulatory Framework: IBG providers of domestic cover are governed by Consumer Protection Laws and regulations specific to residential properties. Providers often need to be authorised and regulated by the Financial Conduct Authority.

Commercial Insurance-Backed Guarantees

Scope:

· Target Market: These guarantees are aimed at commercial properties and business clients.

· Typical Use: Used for larger scale projects such as office buildings, retail spaces, industrial facilities, and other commercial developments.

Coverage:

· Duration: A maximum term of 10 years cover, depending on the nature and scale of the project.

· Coverage Scope: Generally broader with higher financial limits to accommodate the complexity of commercial projects. Within QANW, commercial contracts are reviewed on a case-by-case basis.

Regulations:

· Regulatory Framework: IBG providers of commercial cover must comply with commercial Property Laws and Regulations. These guarantees may also need to meet specific industry standards and may be subject to more stringent financial and risk assessments.

Key Differences:

1. Target Market:

  • Domestic IBGs are for homeowners and residential properties.
  • Commercial IBGs are for businesses and commercial properties.

2. Typical Use:

  • Domestic IBGs are for home improvements and smaller-scale projects.
  • Commercial IBGs are for large-scale commercial developments and renovations.

3. Coverage Duration and Scope:

  • Domestic IBGs typically have shorter durations and have less complex issues.
  • Commercial IBGs often address more complex and higher-value issues.

4. Regulatory Framework:

  • Domestic IBGs follow Consumer Protection Laws specific to homeowners.
  • Commercial IBGs must adhere to Commercial Property Regulations and often involve more rigorous financial scrutiny.

Both types of guarantees aim to provide peace of mind to the customer by ensuring that the work will be completed to a satisfactory standard, and there is cover in place in the event of contractor failure.

Find out more: https://qanw.co.uk/

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