South Australians are being invited to have their say on Building Indemnity Insurance (BII) as part of a state government review to ensure South Australians are properly protected when building a house.
Builders are legally required to take out BII on behalf of homeowners when they sign a major building contract. This provides protection to the homeowner if the builder dies, disappears or becomes insolvent before finishing the building work, or for defective work on a completed home, for up to five years post completion.
The review is being jointly conducted by the Treasurer and Minister for Consumer and Business Affairs, in conjunction with the Master Builders Association and Housing Industry Association, to ensure better protection for homebuilders and support for local builders in the long term.
This includes examining whether existing BII cover is fit for purpose, by looking at factors such as what is covered by BII, the minimum thresholds, and addressing gaps in consumer protection.
The review is also considering issues that have arisen from the recent insolvencies including whether the insurance limit of $150,000 is adequate.
A consultation paper and survey will be available on yourSAy for the next six weeks.
Individuals and stakeholders are invited to share their experiences and insights, with a view to simplifying and strengthening the scheme.
The first round of interviews with builders, insurance brokers and homeowners have already taken place.
Homeowners and industry are encouraged to register their interest in participating in the second round of interviews and stakeholder workshops via yourSAy.
Estimated total claims arising from the insolvencies of Qattro Built, Felmeri Homes and 7 Star Constructions are expected to total $30.5 million in 2023-24. This includes payments already made and those in progress.
There has also been an increase in the number of building contracts that don’t have the mandatory BII cover.
The State Government, through SAFA underwrites BII through reinsurance agreements with QBE Insurance (Australia) Limited which currently administers the scheme. The State is entitled to 100% of the premiums collected and is also liable for 100% of the claim losses, provided through a SAFA insurance fund.
The public consultation process will close on March 25, 2024 with final recommendations expected to be put to government in June.
As put by Stephen Mullighan
Building a home is a huge investment. We need to ensure the best possible protections are in place – both for families and the industry.
Recent insolvencies have highlighted the importance of Building Indemnity Insurance.
I encourage South Australians to share their views and insights to inform this important work.
As put by Andrea Michaels
We want to ensure South Australians have the strongest level of protection possible when building a home.
Building a new home should be a time of excitement and we’ll be considering what protections should be offered to people to safeguard them throughout the building process as well as what can be done to better support consumers when their builder has failed to comply with the legislation governing BII and in cases of substandard work.
This is an opportunity for South Australians to tell us their experiences and contribute to our review and I urge them to do so.
