SA homeowners whose builders fail to finish a property will have more protection under new insurance regulations. Photo: South Australian Government.
The South Australian Government has expanded homeowner protection if their builder fails to deliver, hoping to address the issue of contractors and building companies going bust.
New homeowner protection includes an increase in the maximum insurance payout to $250,000 if a builder fails to deliver a finished property.
The action comes after the Treasurer and the Minister for Consumer and Business Affairs completed a joint review into building indemnity insurance in order to bolster the protection for homeowners as well as the construction industry.
Under the changes, from 1 October, the policy limit for all QBE policies, which encompass the majority of the SA market, will rise from $150,000 to $250,000. This increase will mean that homeowners receive up to $100,000 more if a home is not completed.
An average premium for a new build or renovation valued between $500,000 and $750,000 will increase from $2251 to $2814, a difference of 0.1 per cent of the value of the build.
The government said it would also update regulations to make it mandatory for all insurers to provide more comprehensive cover to protect clients renovating or building their homes.
Given the recent increase in non-completion of buildings, there have been more questions regarding building indemnity insurance, which protects homeowners against losses from the non-completion or defective completion of a home. These may occur because of the builder’s death, their disappearance or their company’s insolvency.
By underwriting the insurance, the government hopes to protect homeowners from the collapse of builders, which can have enormous economic impacts on owners.
“We are providing South Australians with a much stronger level of protection when building a home,” Minister for Small and Family Business Andrea Michaels said.
”Buying a home is the biggest investment most people will make in their lives and it is so important that people have sufficient building indemnity insurance in place when building.”
Last financial year, the government provided a record $18.7 million to help customers complete their home builds and renovations.
The recent insolvencies of major builders such as Felmeri Group, 7 Star Constructions, Qattro Built and Xtraordinary Constructions illustrate the need for reform.
“Our building industry is strong but we have all seen the horror stories in recent years after a builder has collapsed and that’s why we have acted to ensure South Australian consumers have better protection in place to complete their homes in the event something goes wrong,” Ms Michaels said.
In the past year, more than 100 claims have been lodged relating to builders’ collapses.
