Home warranty insurance

Hi guys,

I’ve been speaking with a couple of builders about home warranty insurance. When I asked them if they have enough home warranty cover and what discount they get, one builder acted as if he didn’t understand what I was talking about, and said he would have to check what discount he got. The other builder said his warranty cover is 3 million, and he used to get 30% discount, but since he changed from being a sole trader to a company a couple of years ago, he’d lost his old discount and now he is not sure what discount he has, he will have to check. Just wondering what does the information they provided tell about them?

Any comments are welcome.

Cheers,

Judy

Not sure what you're trying to determine. Whatever discount they get is sort of irrelevant to you. You just want to make sure that they have it.

Hey savagepuppy

In fairness to builders, they're at the mercy of the insurers, and conditions change constantly.

They might not know their discount rate at any given moment. They should still be aware of their cap (or at least know the range).

There's a lot of license lending in the industry too, so that could explain the confusion.
Don't work with builders who are doing license lending.epuppy

Thanks for your reply, noname. It’s something I read online that more reputable builders get more discount. So if they get more discount, they will be more than happy to share With you that information . If they don’t want to share or say they are not sure, it means they are not ranked well or something like that.

Hi home build guide-Colin,

Thanks for sharing that info. Really helpful. As the builder I’m seriously thinking of engaging acted as if he didn’t know anything about the cap. Another two builders told me their cap is 3 mil and 8 mil. I assume the bigger the number is , the bigger their business is? Or the better they are ranked ? The builder with 8 mil cap did mention some other builders work under him. I wasn’t sure exactly what that means. So that means he is Lending his licence to the others ? When you say don’t work with builders who are doing license lending. Did you mean the builders who lend their license( such as the one who mentioned this to me) or the builders who borrow his licence?
Many thanks,
Judy

The NSW warranty scheme is run by Icare under the HBCF.
The discount of premium is not fully reflective of the risk a builder demonstrates to an owner.
You can ask for a copy of their certificate of eligibility which would show current approved insurance turnover profile and last financial assessment date.
They should be able to quote you a premium for the HBCF based on the proposed contract value.

This isn't how you choose a builder. To be honest i think youve confused them with the question rather than them having anything to hide.



the value of their cap is directly proportionate to how much premium they are willing to pay. Again, a really bad way to choose a builder.

Hi joltinjoe,

Many thanks for the info and for the right direction. I will try to ask for their certificate of eligibility then

They have asked me to pay the premium , so it’s not like they are trying to reduce the premium to save themselves money

Hello, just a quick one how long does it take for a builder to obtain their home owners warranty insurance?

about 3-4 days

Thanks Ashington Homes. Based on the turnover time, it seems the builders to obtain the home owners warranty insurance is straight forward. Not sure why my builder is still not having one for construction certificate application as it has been 3mths now. Could you or anyone enlighten me what causes them not getting one? Their excuses are due to COVID, material cost etc.

The only logical explanation is that your builder has maxed out their policy and is waiting for some other projects to finish so that they can free up a spot for you.

To explain, HBFC eligibility has two parts 1. A total dollar amount for the value of all work to be undertaken and 2. The maximum number of jobs.

So for a smaller builder this could look something like $10m dollars and 15 jobs ( this is the same for bigger builders but their numbers are obviously larger).

So if your builder already has a maximum number of certificates issued then they physically can not get any more until other jobs are closed out.

I hope this makes sense if not let me know

Cheers

Simeon

How does the maximum of $340k work for claims (NSW iCare) - are there other sub-limits within each claim?

In Victoria, the builder must give you Home Owners Insurance before you sign the building contract. It is the policy the builder purchases for your benefit (as required by law). It is builders expense, his cost of doing business and he does not have to account to you.
The above policy will not kick in unless the builer is dead, bankrupt or missing.

In addition there must be current builder's construction insurance that insures your dwelling during construction and to the point of handover. So if your house burns down just prior to handover(you paid for it in progress payments), you are covered.

This type of policy is jusually blanket policy that covers all of builders work and the builder does not need account to you but merely prove the currency.

Subsection of the construction insurance policy is public liability and workers compensation, again if current , none of your business.

All of the above insurances are separate from the usual owners insurance after handover.

There is no insurance policy that will cover bad workmanship and building defects, statutory inspections will not necessarily protect you and that is why if you are serious about protecting your investment you should employ your own independent building consultant.
1 Pre contract review
2 Pre slab inspection
3 Frame Inspection
4 Pre plaster inspections
5 Waterproofing inspection
6 Pre final inspection

Many owners have and we went from A-Z with minimum of fuss
Many have not, to their regret