As more builders go bust, consumers face insurance payout delays | The Business | ABC NEWS
Building contracts contain compulsory insurance designed to cover a builder’s client in the event the builder goes bust. The consumer can then, in theory, claim the cost of incomplete or defective work. But often the consumer does not even know the insurance exists, nor do they read the lengthy policy documents detailing the limitations of that insurance. The policy is there as a last resort. And it goes by different names in each state and territory, including builder’s warranty insurance, domestic building insurance and home warranty insurance. When consumers try to claim the cost of repairs via their policy, many realise only then that there are restrictions. Those include different liability caps placed on insurers in each state and territory. When there are delays in insurers paying out claims to consumers, the impact can be disastrous, leaving people hundreds of thousands of dollars out-of-pocket. Consumers also feel they are at a disadvantage during disputes with insurance companies, having to hire lawyers to fight the insurer and take the matter to court. Some lawyers and consumer advocates say builders warranty insurance is complex and doesn’t offer adequate protection for consumers. There are calls for national minimum standards, including limits on how long it should take to settle insurance claims.
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