Definition - What does Latent Defect mean?
A latent defect is a weakness in a product that shows itself past the time of the purchase. A latent defect in a property usually does not manifest itself even with a thorough inspection of the property before a sale. In terms of insurance, a latent defect is an exclusion in a property insurance.
Insuranceopedia explains Latent Defect
A latent defect that causes a loss is not covered by insurance and is considered as an exclusion. However, if another factor spurs the latent defect to create a loss, then the exclusion is ignored. Concrete floors that crack over time due to sub-par materials are not going to be covered by an insurance. However, faulty electrical wiring that causes a fire and therefore causes considerable property damage might coerce the insurance to cover for the damage.