Home Warranty Insurance
Date: December 31, 2008
Authors: Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
There is an approved list of insurers who sell home warranty insurance for residential building work in NSW under the Home Building Act 1989.
Essentially home warranty insurance is required for residential building work including the supply of a kit home where the value of the work exceeds $12,000. Previously minimum cover was stipulated at $200,000 but from 1st March 2007 this was increased to $300,000. Cover in excess of this limit can be negotiated at any of the approved insurance companies in New South Wales. Home warranty insurance must be obtained by the builder and a certificate given to the home owner prior to taking any money under the contract and before commencing any work for supplying a kit home. Any tradesperson who is carrying out residential building work where the value exceeds $1,000 is required to hold the appropriate licence from the Office of Fair Trading. It should be noted that where the value of the works exceeds $12,000 they also need to obtain home warranty insurance from an approved insurer.
Although any home owner may take comfort from the fact that their licensed builder has provided them with a certificate of home warranty insurance they should not forget that this policy does not extend to include defects and only covers the death, disappearance or insolvency of the builder. In other words all defects claims are to be met directly by the builder whereas previously they fell to be met by the insurer issuing the home warranty insurance. There are a number of traps and pitfalls with home building contracts and home warranty insurance. Essentially a home warranty policy is a hybrid liability product which is limited by the following:-
- basis of insuring clause
- conditions precedent and conditions subsequent
- nature, limits and extent of cover
Remember, overpayments are not compensable under home warranty policy. Claims for incomplete work are limited to 20% of the contract price up to the maximum specified by the policy. The policy covers non-structural defects for a period of two years and structural defects for a period of six years from completion of the works. Claims for incomplete work are only covered for up to 12 months following the failure of the builder to commence or after ceasing work. All claims should be notified to the approved insurer within six months of the date the claimant first became reasonably aware of the circumstances giving rise to the claim. Whether the policy does or does not respond the importance of the home building contract should not be overlooked. There are a number of forms around none of which are perfect. Essentially these contracts are drafted to protect the builder rather than the home owner and may have very harsh consequences for them where these documents are executed without first seeking independent legal advice. Every time we are approached by a disappointed home owner who is experiencing problems with their builder before executing a building contract they all say they wish they had obtained independent legal advice before they had done so as they never realised how exposed they were and the only reason for doing so was they didn’t want to spend any money on legal fees as they couldn’t see the value in it at the time.
Unfortunately it is commonplace for the cost of construction to blow out by over a third of the original contract price for a variety of reasons including the performance of the builder leaving the home owner exposed to increased costs which are exceedingly unwelcome in the vast majority of cases. Essentially these claims break down into claims for: breach of statutory warranty; breach of contract; faulty design and the Trade Practises Act matters in some circumstances.
Although claims are governed by home building regulations the process is not a user-friendly one as it provides the insurer with a 90-day period within which to determine liability and provided they have applied for an extension of time before the 90-day period lapses this is further extended before they are deemed to have accepted liability. The 90-day period only starts to run from the time the home owner provides the insurer with the prescribed claims information which means that 90 days may be the minimum period within which the insurer has to determine liability. This is made even more interesting when you consider that stand-alone defects claims are no longer included as the policy only responds to faulty and incomplete work where the contractor dies or disappears or becomes insolvent.
Many home building disputes in NSW under the Home Building Act 2004 find their way to the Consumer Trader and Tenancy Tribunal as all intermediate steps have proved disappointing to say the least. Generally speaking it is best for the home owner to try to resolve the matter with the builder wherever possible particularly where the amount in dispute is less than $25,000. Sometimes there is fault on both sides and a negotiated settlement is the best outcome given the circumstances. Where either party has become unreasonable then you should seek competent legal representation to resolve the matter. Whatever your circumstances please do not hesitate to contact LAC Lawyers on 1300 799 888 to arrange an appointment.
Insurance Law - Rainstorm, Flood Insurance and Cyclone Insurance Claims - Part 1
Date: February 02, 2011
Author(s): Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.
During December 2010 and January 2011, large areas of central and eastern Queensland have faced the full fury of nature in the form of devastating rain storm, flash flooding over land which is generally completely dry, and flood from overflowing watercourses being streams, rivers, lakes or reservoirs. In late January / early February, coastal Queensland is also being threatened by a category two and by a category 5 hurricane which might cause further damage to infrastructure, homes and businesses.
Insurance Law - Rainstorm, Flood Insurance and Cyclone Insurance Claims - Part 2
Date: February 02, 2011
Author(s): Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.
The law in this area is complex. The precise policy wording needs to be taken into account and legal advice should be obtained. By way of general proposition only, the following statements maybe relevant.
Insurance Law - Rainstorm, Flood Insurance and Cyclone Insurance Claims - Part 3
Date: February 02, 2011
Author(s): Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.
The Insurance Contract Act obliges insurers to particularly notify insured’s of what is regarded as an “unusual term” prior to the contract of insurance being entered into. If such notification does not take place, insurers cannot rely upon such an unusual term to deny a claim. To do so amounts to a breach of the duty of utmost good faith owed to insureds by insurers. The notification must amount to a description and explanation of the effect of the term rather merely than notifying the term itself.
Insurance Law - Queensland, New South Wales and Victorian Flood Claims - Part 1
Date: January 21, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
During the course of the current storm disaster catastrophic damage has been experienced in all of the eastern states of Australia. Interestingly we have all heard of estimates of $500M, $1B, $5B and now $20B from the ANZ’s economists. In other words the rebuilding costs for floods will be substantial. As the Queensland Premier says, the damage bill will be noteworthy and that 28,000 homes will need to be rebuilt at a cost of approximately $8B out of a total rebuilding cost of $20B.
Insurance Law - Queensland, New South Wales and Victorian Flood Claims - Part 2
Date: January 21, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
In all such cases where there has been catastrophic water damage through the incident of storm and/or flood it is obvious that the full benefits of an insurance policy are more fully available where the cause of the damage is storm. That is, even where an insured does not have the benefit of flood cover and they can rely upon their policy of insurance for storm cover they are far better off irrespective of the type of building damaged without extending the policy.
Insurance Law - New South Wales and Queensland Emergency Flood Claims
Date: January 06, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Recently Eastern Australia has been swept by massive storms which have caused extensive storm and/or flood damage to both domestic and business establishments. The problem when it comes to flood damge is that many insureds fail to understand what their rights are and that under many policies flood damage is either not covered or only nominally.
Insurance Contracts Act - Changes to Insurance Law and Practice for Insureds, Insurers and Brokers
Date: August 02, 2010
Author(s): Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.
Important amendments to the Insurance Contracts Act 1984 (Commonwealth) (“the ICA”) were expected to be passed by the Commonwealth Government in the Spring session of the 2010 Parliament. Their passage will now have to await the sitting of the new Parliament in late 2010.
Insurance Law - Product Liability
Date: May 10, 2010
Author(s): LAC Lawyers
Generally product liability in law refers to the responsibility or the liability of manufacturers, distributors, suppliers, retailers, and others who produce and supply goods/products to the public which result in damages or injury caused by the use of a defective product.
Insurance Law and Business Interruption Insurance
Date: December 05, 2007
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
People in business insure their premises, contents and stock against the material damage risks of fire, explosion and other perils, but have they given the same thought to the other problems which would arise following any of these events, the problems which manifest themselves when the fire engines have driven away.
Insurance Law - Storm Claims and the Newcastle/Hunter Region
Date: June 21, 2007
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Although underinsurance or the lack of insurance is a major problem for the community in both good and bad times its importance is critical in times of natural disasters including storms and cyclones. Every time there is a major storm either general or localised flooding is a problem.
What to expect when you call LAC Lawyers
Date: December 13, 2006
Author(s): LAC Lawyers
LAC Lawyers is a full service firm dedicated to the provision of superior legal services in Australia. Our aim is to provide unrivalled client satisfaction coupled with high quality service and advice. When you call LAC Lawyers our friendly reception staff will spend time with you to identify the area of law your enquiry relates to then pass you on to one of our qualified solicitor's who can help you.
Insurance Law - The different types of Insurance Claims and why they are sometimes denied
Date: October 09, 2006
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Claims are often denied by insurers for a variety of reasons. They may have been denied for anything from non-disclosure of material fact through to fraud or over-capitalisation of loss. Interestingly, there has been a fundamental change over the last ten years in the approach taken by insurers with the denial of claims.
The Benefits of Hiring A Lawyer
Date: August 16, 2006
Author(s): LAC Lawyers
The old adage “you get what you pay for” is as true today as it has ever been.
Australian General Insurance Claims Practice
Date: August 02, 2006
Author(s): LAC Lawyers
Why stay with your lawyer
Date: August 01, 2006
Author(s): LAC Lawyers
The lawyer/client relationship is a personal one and there are many reasons which will dictate who you can and cannot work with. If you don’t like your lawyer, should you change? Ultimately, the relationship between a lawyer and client must be built on mutual trust.
Does The Duty of Utmost Good Faith Apply to Claims
Date: May 04, 2006
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Originally the duty of utmost good faith was a common law concept which applied directly to contracts of insurance.
Claim Brokers
Date: May 02, 2006
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Many corporate, commercial and business insureds shrug off the idea that they won’t get a fair deal from their insurer because of their buying power and they have an Insurance & Risk Manager, a Company Secretary/Finance Director and/or an Insurance Broker who are there to ensure this can’t and won’t happen. Think again.
Why Insurance Claims Are Not Paid
Date: May 02, 2006
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
What Impact Has Civil Liability Act 2002 (NSW) Had On Damages and Personal Responsibility?
Date: February 12, 2006
Author(s): LAC Lawyers
Essentially the change has been profound as people are now required to look after themselves and take responsibility for their actions. The Civil Liability Act mainly deals with the question of damages whereas the amending Act deals with liability, but, with that said, the courts now pay proper respect for the concept of personal responsibility as required under the Civil Liability Act 2002 (NSW) ("the Act") and the Civil Liability Amendment (Personal Responsibility) Act 2003 ("the Amending Act").
What Insurance Crisis - Is There Really One Following The Collapse Of HIH and FAI?
Date: February 12, 2006
Author(s): LAC Lawyers
Many commentators have gone out of their way to suggest there was an insurance crisis and that it arose out of increased litigation, more successful claims and higher awarded damages which led to the unaffordability of public, products and professional indemnity insurance.