The state government will ensure people building a home are better protected, with maximum insurance payouts to increase to $250,000 if a builder fails to deliver a finished home.
The Treasurer and the Minister for Consumer and Business Affairs have completed a joint review into Building Indemnity Insurance to enhance protection for consumers and support for the building industry.
Under the reforms, from October 1, the policy limit for all QBE policies which represent the majority of the SA market will increase from $150,000 to $250,000. The 66 per cent increase will see home builders receive up to $100,000 more in the event their home is not completed.
The average premium for a new build or renovation valued between $500,000 to $750,000 will increase from $2,251 to $2,814, a difference of $563 or 0.1 per cent of the value of the build.
The $100,000 increase in cover is to keep pace with the higher building industry costs.
The state government also intends to update the regulations that will make it mandatory for all insurers to provide the increased cover to better protect all people building or renovating their home.
Building Indemnity Insurance protects homeowners against losses relating to non- completion of a property and defective works where a builder dies, disappears or becomes insolvent.
It has ensured work can be completed on properties impacted by the insolvency of major builders, including Felmeri Group, 7 Star Constructions, Qattro Built and Xtraordinary Constructions.
Through underwriting Building Indemnity Insurance, a practice the state government took on when private insurers withdrew from this specific market in 2013, it’s sheltered homeowners from the collapse of builders.
Last financial year, the state government provided a record $18.7 million dollars to assist consumers in completing their home builds and renovations.
The largest number of claims resulted from the insolvency of Qattro Built in September 2023, with 251 claims to date.
In the past 12 months, several builders have become insolvent, and currently more than 100 claims have been lodged relating to the collapse of those businesses.
See www.bii.sa.gov.au for details about building indemnity insurance and how to check for a valid policy.
