A cargo insurable interest that ceases during the transit for reasons other than maritime perils. A merchant, who is entitled to reject goods because of default by the seller, has defeasible interest which is insurable.

Inadequate or insufficient design in premises or products. Risk management focuses upon designing out risks at the inception. In buildings, the Construction and Design Management Regulations 1994 applies, inter alia, to the design stage. HSWA 1974, s.6, places safety responsibility on designers of products (machines, etc.) for use at work. The defective design risk may be excluded from product liability insurance on the grounds that it is a professional negligence risk. The design risk is not excluded for retailers; they may be strictly liable for defective products under the sale of Goods Act 1979.

Section 1 places an obligation on builders and developers to build dwellings ‘fit for human habitation. The duty is owed to all persons who acquire an interest in the dwelling for six years from when the work is completed or remedied. Section 3 removes ‘caveat emptor’ in selling property (this requirement is not restricted to dwellings) and makes vendors and lessors liable for negligent work on the property carried out before the sale. Section 4 makes ‘repairing’ landlords liable for defects of which they know or ought to have known. All public liability and household policies carry a Defective Premises Act 1972 liability extension.

For Consumer tection Act 1987 purposes: a product where the safety is not such as persons generally are entitled to expect. A product is not considered defective merely because it is of poor quality or because a safer version is put on the market. When deciding whether a product is defective, a court takes account of all the relevant circumstances including: the manner of marketing; any instructions or warnings given; what might reasonably be expected to be done with it; the time the product was supplied.

Indemnifies the prospective purchaser of land against loss occasioned from defects in the legal title arising from missing documents, etc. A title insurance policy extends for so long as the insured’s interest in the property remains. The insurance is normally required by mortgagees before being prepared to grant loans where the mortgagor is at risk of a defective title.

1. Motor trade. Negligent workmanship on a customer’s vehicle or the sale of a defective part by a motor vehicle repairer may cause an accident. The resultant liability can be insured under a motor trader’s comprehensive road and garage policy, or as an extension of the internal risks policy. ‘Workmanship’ means ‘repair, servicing, or maintenance and includes the predelivery check of a new vehicle and MOT tests. The widest available cover embraces: negligent workmanship, sale of spare parts and liability for damage to the customer’s vehicle. 2. Public liability. See PROPERTY WORKED ON.

A pre-agreed period, commonly 12 months, starting from practical completion during which a builder must remedy, at his own expense, all genuine defects appearing in the building. The builder’s liability policies should continue to run during this period.