Home Warranty 101: Understanding Statutory Insurance in Construction

If your builder is saying to you when you're having a look at your contract, it should be factored into the contract, ask for a certificate of currency, then that dispute process is closed and it goes through to the insurance thing that is assessed for the claim.

Hey guys, welcome to the Builders Edge. I'm Norm Wales from Norm Wales Constructions. Now for me, the whole purpose of this podcast here is to bring a little bit more awareness around the construction industry. I've been feeling for many, many years that there's not enough helpful information out there to support you guys to make the right choice. Now we are a smaller family independent building company and we're not here to build everybody's home, but we would definitely love to be able to work with you to facilitate your dream home. But if we don't build your new home, we want you to be able to make the right decision in choosing the right builder for you. So hopefully the information that I'm able to provide through this podcast can be informative and helpful that you can now create your dream home. So I hope you enjoy and thanks for watching. So Nicola, what exactly does statutory home warranty insurance cover and why is it essential?

Okay, so, and again I will refer to my notes throughout this. Although I know this, this topic quite well, I want to make sure that I'm again making sure that I'm giving the 100% correct information.

No, that's great.

However, again, we talked earlier about the Queensland Building Construction Commission regulating the building construction industry in Queensland.

And as part of that they, they have the statutory home warranty insurance scheme. So anybody who is licensed in Queensland who performs building work over $3,300 has to pay home warranty insurance on that project.

So what does it cover? It covers whether or not you have that project completed. If for whatever reason a contract falls over and the building work is incomplete, that would be where that, that, that home warranty insurance comes into, into effect and can assist you. I'm going to refer to my notes because I love this topic.

That's all good. No, honestly, that's great. Like just, you know, obviously the notes and that you have there, it's really important because we want to make sure that our listeners, they're getting the right information. You know, that's what this all is all about, that they're getting the right information to make the right choices.

That's the most important thing. So it's mandatory. Okay, so if your builder is saying to you, you know, when you're having a look at your contract, it should be Factored into the contract it will say QBCC Home Warranty Insurance or Statutory Home Warranty insurance or whatever it may be referenced as on the contract. And if you're unsure of what that is, it's a mandatory payment that is required in Queensland. So you as the consumer pay it and your builder then pays the QBCC through his MYQBCC or his licence. So, so the premium needs to be paid on or before building work begins or within 10 days of the contract being signed. So whichever happens the soonest.

And it covers you as a homeowner if something can go wrong. So for example the contractor not completing the work they were contracted to do or post build if the contractor fails to rectify any alleged or identify defects. So and I'll go into that a little further when we talk about how it's utilised. But the scheme itself can pay up to 200,000 on certain claims. However there's strict time limits for making a claim. So it's very important that you are aware of that as a consumer if you need to go down that road and again we'll talk about that soon, it covers you for loss if something goes wrong during the building process. So and I pray that this never happens. But of course, you know, during COVID and after Covid we've been seeing this happening a lot unfortunately. We've had builders who, who have gone down and as a result of that you often find you have, you know, a non complete home and that's where that comes into effect during the build.

But like that's you know, definitely so reassuring for the consumer. They're knowing that they've got that there. So it's almost like a life jacket for themselves, I mean like that safety blanket there to help themselves. So you know, there shouldn't be any fears or concerns with taking that step in building because yes, unfortunately some people, you know, don't survive and they do fall off the perch a bit there. But you know there are good reputable builders that are, you know, being around doing that sort of stuff. So it shouldn't not instill confidence for people sort of still continue moving forward that there especially knowing that, you know, that's in place there to protect them.

And that's right and it's a one off payment and you may never have to use it. But you're right, it's there just for that reassurance that if you do have to, that one off payment gives you, you know, $200,000 or you can go up to 300,000 if you want to do that increase, but it just gives you that reassurance that it is there. So you're. So you're essentially covered for six years and six months from the date that the contract is signed.

For any building work that may need to be rectified.

Yeah, look, I guess that's the benefit of building a lovely place like Australia. Like, you know, we cover all those angles and we definitely try and deliver the product that we all say we're going to do and safeguard that. That's great. And how can homeowners like verify that their builder carries like the right insurance?

Ask for a certificate of currency. Yeah, you know, again, it's back to that. Asking the right questions at the right time before the building work even commences. Ask for a certificate of currency. Just so you know that they, that they have the right insurances in place.

Yeah, no, no. Excellent. And when it comes down to like, you know, what are the common misconceptions about home warranty insurance, you know, that families should avoid?

Great question. One that I get quite regularly and unfortunately one that I get from, from our industry quite regularly and for me, why I'm so passionate about being over here and educating the industry on what is right, especially what we can and can't do under the legislation. The misconception that the home warranty insurance is there like a normal insurance scheme is incorrect. It's not something that you can just make a claim on. In fact, it's something that we just don't want to utilise if we don't have to. So if you have an alleged defect in your home from the date of completion, so the date of PC practical completion, you have a 12 month defect liability period that comes into effect for any non structural or category two items. So you know, your painting and wobbly door handles and things like that that don't impact the structural integrity of your home, you know, your builder, if you, you still have a great relationship with your builder and I'm sure you will, you put a list together, you provide it to your builder and your builder will arrange to, to have the relevant trades come out and identify whether or not it is a defect and if so rectify it.

And like, that's exactly right. But like a good building company, you know, should be standing by their product as well.

Yeah, 100%.

A good builder should actually be making those routine follow ups and checks and keeping in contact and having that after sales service and you know, that warranty like, you know, just from the faith of that they're there doing the Right thing.

Yeah, that's true, that's true. But Norm, it doesn't always happen.

Look, unfortunately not, you know, and obviously you see it as much as I do then, and, you know, this happens from, you know, not just a bloke that's working over back of a trailer that doesn't have the facilities to be able to go back to those jobs. It's also happening to the bigger firms that are. Get busy, get busy. But you're not necessarily cutting corners, but just choosing to neglect the customers. Do you know what I mean?

Yeah. So if we are, you know, educating consumers right now, that would be, my advice would be, you know, put your list together, keep putting your list together, but don't, don't sit on it and wait until the last minute to let your builder know that there's issues within your home. If you think that there's issues within your home. And perception is one thing. And that's why I always say alleged defect, because it's not necessarily a defect until it's deemed a defect. So what may look like a defect is not necessarily a defect under the standards and tolerances.

But that's right, you know, like it's, you know, that's something that needs to be clarified. But like, I personally believe if you've picked the right builder and you've built the relationship with that builder, you know, they're going to stand by what they're doing. And it's just not the builder, it's the builder that chooses the right trades, the right suppliers. All those guys stand by their product, you know. So, okay, let's say it's your kitchen, your drawer's not closing properly or something like that. The cabinet market comes out and just fine tunes it and tweaks it up. It's not necessarily a defect. It could have been the door was slammed, it could have been overloaded. Where things are like, there's not necessarily going to be a problem with it. It's just a maintenance thing. Just like going to get your car serviced and, you know, getting your tires done, they put the little sticker on the, tighten your wheel nuts, check them after 50 kilometers, you know, it's wear and tear, it's maintenance, you know, but if any supplier, you know, contractor, you know, that's affiliated with that builder, you know, it helps inform the customer and the builders there, supporting the customer through that after care, you know, it doesn't have to be a defect or a problem. Yeah, I mean, it's about education around how to maintain your home or okay, if it is a wobbly door handle or something like that. The builder's onto it, tightens it up. Might even be able to, you know, a good builder might give you a 101 or going well hey, you know, to get the slamming door bit you might just have to keep this screwdriver or fix this up here to do that next time or you know, ways and means around how to avoid potential things as well, you know.

So the insurance scheme is actually designed to cover your home for six years and six months from the date of completion, sorry from the date that you enter into a contract. But defects can actually be looked at from the date of completion for six years and six months. There's a bit of an overlap there. A common misconception is that a consumer is told to just contact the QVCC and make a claim. That's a common misconception that I see because like I said, it's not like a normal insurance product. It's, you can't make a claim on it. You actually have to go through a very long and sometimes drawn out dispute process first and foremost.

And then if the, the items are alleged, defects are deemed as defective and the builder is subsequently given a direction to rectify and fails to rectify, then that dispute process is closed and it goes through to the insurance scheme and is assessed for a claim. So that's the, that's a huge misconception and it's something that I see in the industry all the time and it's something that I really like consumers to be aware of that this is not a normal insurance scheme. However it is there to protect you and give you peace of mind.

No, no, that's exactly correct. So Nicola, in what ways does statutory home warranty insurance protect families in the long run?

So like I said earlier, it's actually, it's in effect for six years and six months from the date the contract is entered into or what commences, whatever is earlier. And it's there for just that added protection that if you're builder for whatever reason isn't able to go and rectify what is a defect. So again you've got that 12 month defect liability period from the date of completion but you've got structural defect coverage and subsidence coverage for that six years and six months. So if you contact your builder and say, hey look, I'm really concerned, the wall in my lounge appears to be sinking and for whatever reason the builder isn't around anymore or is unable to attend and assist rectify whatever, that's where you go through the QBCC process and actually get assistance under that scheme.

Yep. No, look, that's very clear and very helpful, I believe. So obviously, you know, the biggest takeaways that you can sort of see from that there is that, you know, understanding the actual insurance and what it does cover. And I guess it's that safety blanket there for the worst case scenario for the consumer. But also what I did, like there is like, you know, if you're finding the right builder, you know, defects and things shouldn't necessarily be a problem. But then, you know, I guess if there are deemed, you know, defects and there are problems there, you know, there's a process to follow and that can get help there to sort of rectify that.

But again, that's worst case scenario. Even if they are identified as defects by your builder, you don't have to go through the QVCC process. You were saying earlier that a builder, you know, who has a good relationship with their client will, will go and assist and, and you know, have a look at any concerns and rectify if necessary. So essentially the QVCC should never get involved. They are just there as that safety, safety blanket, so to speak. But yeah, hopefully never have to. To utilize them.

No, most definitely. Look, and look, you shouldn't have to be using that if you're choosing the right builder.

Yeah.

You know, doing your homework to start with. So. No, that, that's, that's fantastic. I love that. All right, Nicola. Well, look, obviously you've been here before and there's always one last question I like to ask and we'll go to the jar again.

Okay.

So, Nicole, what's the most important quality in a person?

Oh, golly. I think integrity, to be honest. Yeah, I think having, having integrity is really important to me.

Yeah. So, yeah, no, I like that. I must admit that means a lot for myself there as well. But definitely, I guess just, you know, being able to call a spade a spade, like, you know, I guess that's the integrity, just being able to, you know, be real and honest.

Yep.

You know, and I, I think that's a really good quality to have in anybody.

Absolutely. Yeah.

No, that's a pleasure. All right, Nicola. Well, thank you very much for coming on today's show and giving our listeners some very, very informative information like. So hopefully you guys have, uh, enjoyed watching this episode of the Builder's Edge and we'll keep bringing you very helpful information that can help you guys make the right decision in building your dream home. So thanks for watching.

Thanks.