Consumers urged to check their builder’s insurance

Consumer Protection and the Building Commission are urging Western Australian consumers who are engaging the services of a builder to check the veracity of their home indemnity insurance certificate.

The warning follows two recent cases where fake or forged insurance certificates have been, or may have been, used by builders.

In April, Fremantle builder Adrian Burt, as a result of disciplinary action by the Building Services Board, was fined $20,000 by the State Administrative Tribunal for forging five home indemnity insurance certificates in relation to building work carried out by Adrian Burt Homes Pty Ltd in Como, East Fremantle, Applecross, Menora and Bicton. The builder had also commenced work at one of the locations without having a building permit.

In another case, Adelaide-based builder GNC Homes Pty Ltd is under investigation by Consumer and Business Services and South Australian Police following allegations that the company had used false insurance certificates in the construction of almost 200 homes, many being built for WA property investors.

Apart from being registered, a builder carrying out residential building work valued over $20,000 is required to obtain a home indemnity insurance policy in the owner’s name. The builder must provide the owner with a copy of the certificate of insurance before demanding any payment or commencing work.

Home indemnity insurance provides a measure of protection for consumers in the event the builder dies, disappears or becomes insolvent and provides the owner with up to $100,000 to cover the extra cost of getting a new builder to complete the work. In most instances, the insurance policy must cover the residential building work during the construction period and for six years from the date of practical completion. 

Acting Commissioner for Consumer Protection Gary Newcombe says consumers who are entering into a building contract should independently verify if the construction of their home is covered by this essential insurance.

“Consumers should be given a copy of the builder’s home indemnity insurance certificate or, if not, they should ask for it. They should then contact the insurance company direct to check that it is valid and current,” Mr Newcombe said.

“While we believe these cases are isolated, the cost of a phone call will give consumers some peace of mind on this very important element of building a home.”

Building Commissioner Peter Gow says registered builders are required by law to provide home indemnity insurance.

“Apart from breaching the Home Building Contracts Act, home builders are also putting consumers at great risk of financial loss if they commence work on a project without having the compulsory home indemnity insurance in place,” Mr Gow said.

“Insurance companies have already begun the process of watermarking the certificates to prevent forgeries, but consumers should conduct their own checks if in doubt.”

Consumers who have concerns about their home indemnity insurance certificate should first contact the insurance company. Any issues can be reported to the Building Commission on bcinfo@commerce.wa.gov.au or call 1300 489 099.

END OF RELEASE

Media contact (Building Commission or Consumer Protection)

Building and Energy / Consumer Protection
Media release
12 Aug 2015

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