Compulsory building insurance is being investigated by the Government as a way to help leaky-home owners get action more quickly than now.
Building and Construction Minister Clayton Cosgrove yesterday confirmed he had been looking at Australian examples of building insurance, and he is interested in finding out what
the insurance industry would be prepared to offer here.
Work on the idea is at an early stage and is part of a wider research programme, but Mr Cosgrove said he "intuitively" liked compulsory insurance if it was of the right type.
"If someone said to me 500 bucks, you get 10 years' insurance in case the builder does a runner or something goes bung, I would have said 'great'," Mr Cosgrove said. The builder would likely take out the insurance on the work done, and the cost would then be passed through to the buyer of the property.
But Mr Cosgrove said the idea of compulsory building insurance was not a simple one and the Government was not committed to introducing it. He had seen problems with some of the products being offered in several Australian states, where "last resort" insurance operated.
Under "last resort" schemes, if there was a dispute over faulty work, the builder had to have either died, disappeared, or been driven insolvent by someone taking him or her to court before the insurance kicked in. It could take time to get to the point where the home owner received the benefit of the insurance, and Mr Cosgrove said that model did not appeal.
He was more interested in "first resort" insurance, which would be similar to car insurance, where a car owner typically benefited early on when a claim was accepted.
A type of first-resort system operates in Queensland, but the insurer in that instance is the Government - and Mr Cosgrove said he had no plans to see that happen here.
Some insurance products were already offered in New Zealand by building organisations, Mr Cosgrove said, but they too had their problems.
There have been indications from the insurance industry to officials that upcoming changes to the way builders are licensed, and strengthened rules, would reduce the risk to insurers, meaning new products could be developed.
