As Government scrutiny on the industry increases one insurer reaches a milestone for residential buildings under guarantee

In the last 12 months CBL Insurance Limited has underwritten $750m of residential building projects through its Homefirst 10 Year Builders Guarantee scheme. This takes the value of New Zealand homes protected by the guarantee to more than $2.5bn.

Ben Rickard, Marketing Manager at Builtin New Zealand, the company that administers the scheme in New Zealand, believes its success is powered by the fact it is independent of the builder. “This independence gives the guarantee credibility in the eyes of homeowners as claims are also assessed independently.”

And at a time when the Government is examining the market for builders guarantees, also known as home warranty insurance, this growth is suggestive of a greater awareness and demand from homeowners to protect their investment.

The market for residential building guarantees has in the past suffered from criticism that the claims process can be painful for homeowners and skewed in favour of the builder. However, Mr Rickard says this is changing as insurer-backed products take a larger share of the market. “Unfortunately, often due to the nature of the building industry and the structure of builders guarantees as ‘last resort’ policies, the claims process can be stressful for homeowners. We have to firstly ensure that all avenues to resolve the problem between the homeowner and the builder are exhausted before we step in. But working with a licensed insurer means there are more regulations protecting consumers’ rights, including the requirement to belong to an approved dispute resolution scheme.”

Mr Rickard points to the recent collapse of building firms in Christchurch and Auckland as a reason why taking out a builders guarantee is a no-brainer. “These companies grow quickly but are highly leveraged, get into cashflow trouble and then can’t meet their promises. There will be more because with every building boom you also get building busts, which is why homeowners need to choose a builder who can provide an independently insured guarantee.”

The Homefirst Guarantee has been operating in New Zealand for more than 10 years. More than 1,700 builders are now able to offer the guarantee, including members of the Certified Builders Association and other builders who have passed Builtin’s accreditation criteria. CBL Insurance is a licensed New Zealand insurer with 40 years experience and more than 4 million homes under warranty worldwide. Builtin New Zealand Limited are specialists in guarantees and insurance for the building industry.

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