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Consumer claims under Builders Warranty Insurance

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Slater and Gordon is often engaged to challenge the actions of builders warranty insurers. Unfortunately, in most jurisdictions, the insurance regime for home owners is unfair and difficult to access.

The insurance regimes that apply in most states is known as “last resort” insurance and was introduced in the early 2000’s following the collapse of HIH.  Typically the insurance is obtained by the builder:

  1. Before the builder enters into the building contract; or
  2. After the builder enters a building contract but provided the contract contains written provisions that require the builder to obtain a warranty insurance policy before:
    1. The builder is entitled to enforce any provision of the building contract;
    2. Before any domestic building work under the building contract is carried out; and
    3. Before any money (including deposit) becomes payable under the building contract.

Where a builder fails to complete their contractual obligations and/or rectify building defects, in most jurisdictions -other than Queensland- consumers can only access a “builders’ warranty insurance policy” as a last resort, namely, if a builder is dead, insolvent or missing. Until such time that one of these events comes to pass, the consumers’ only avenue it to work directly with the builder to resolve their dispute and, if that fails, to engage in litigation. Many home owners are unable to access the policy because the builder remains solvent but refuses to perform rectification works. Their only remedy is litigation.

Insurance has not responded when:

  1. Insurer’s use loop holes in the insurance regime to deny indemnity. For example, this can occur when a different entity is listed on the insurance certificate from that which is listed on the building contract. This denial occurs even when the builder is declared insolvent;
  2. a consumer relied upon a building surveyor to ensure that the entity on the building contract and the entity on the insurance certificate are the same entity when issuing the building permit;
  3. it eventuates that the builder is not actually a registered practitioner;
  4. the builder is declared insolvent but just prior to the declaration of insolvency had failed to lodge an insurance application, in the meantime consumers have lost deposits advanced at the time of entry into the building contract.

Every day we are working on challenges to these unfair outcomes with builders warranty insurance claims. If you require our assistance please contact us by completing the form below.