Western Australia Minister for Commerce Bill Marmion
Insurers Sign Up To Secure Home Building Indemnity Cover
Victor P Taffa
Western Australia Minister for Commerce Bill Marmion announced today that in-principle agreement had been reached with two insurance companies to ensure coverage would continue to be available to new home buyers and renovators against the risk of a builder going under.
In Western Australia, all residential building work valued at more than $20,000 must be covered by Home Indemnity Insurance. Under a deed with participating insurers, the State Government provides indemnity for claims between $10 Million and $90 Million from the collapse of any one builder.
Mr. Marmion said the Government had negotiated with QBE Insurance Australia Ltd and the Calliden Group to join the scheme and provide home indemnity coverage in WA for a fixed three-year term.
Earlier this year, Vero Insurance Group currently the major provider of home indemnity insurance in WA announced it will end its coverage in WA on June 30, 2010. Vero will continue to honour existing policies but will not be providing any new insurance.
Vero’s decision follows the withdrawals of CGU Insurance and Lumley Insurance from the home indemnity insurance market in WA late last year.
“The Government has agreed to retain the current mandatory scheme for a fixed period of three years to allow reform options to be considered, and for the arrangement of an orderly transition to a new system, should it be required.” the Minister said.
“Our preferred position is for private insurers to continue to provide home indemnity coverage under the scheme and, while that continues to be the arrangement, the Government will maintain its ‘safety net’ support along similar lines to those provided previously.”
“I am very pleased at the commitment shown by QBE and the Calliden Group in their willingness to participate in this market.” Mr. Marmion said.
“There has been some instability in the market in recent years and that is why we are acting to ensure ongoing certainty for builders and consumers. We want an appropriate and stable insurance system in place with no interruption to the normal flow of building work in WA.”
Home Indemnity Insurance protects homeowners from loss during the building process should their builder die, become insolvent or disappear during the six-year warranty period.