HOUSING INSURANCE CHANGES TO PROTECT AUSTRALIA’S BEST HOME WARRANTY SCHEME

Queensland’s home warranty insurance scheme is being expanded to give home builders greater cover and protect the state’s uniquely successful scheme, Housing Minister Robert Schwarten said today.

Mr Schwarten said the changes, which came into effect this week, ensured the scheme remained Australia’s best and most accessible and financially responsible for Queenslanders building their own home. He said the initiative was recommended by the Queensland Building Services Authority Board which represents the building industry.

“The Queensland Home Warranty Insurance Scheme protects consumers if the builder goes bankrupt or into liquidation, fails to complete the contracted works for reasons that are not the consumers fault, carries out defective work, or when subsidence occurs,” Mr Schwarten said

“The Queensland Scheme is the only not for profit statutory home warranty insurance scheme in the country, with all other states using private insurers.

“Unlike other states, Queensland does not limit its cover to bankruptcy, death or disappearance of the contractor. Our cover includes non-completion, defects and subsidence, meaning an owner who has a non-completion claim does not have reduced cover for defects and subsidence which are insured for 6 years 3 months after they occupy the house.”

The changes increase the total policy cover to $400,000 – up from the $200,000 limit set in 1999. They also reflect the rising cost of claims paid by Australian insurers as a result of increased building costs nationwide. The premium rise is limited to 4.6-6 % for the average first home or renovation.

“Schemes in the other states have struggled because they do not meet the needs of consumers and contractors who are forced to take legal action to solve their building problems,” Mr Schwarten said.

“By contrast, the Queensland scheme has been praised by Choice Magazine in a home warranty feature and even by the Leader of the National Party in Victoria, Peter Ryan, who said this week that Victoria should adopt the Queensland model.”

The Queensland scheme is administered by the Building Services Authority, whose General Manager Ian Jennings said the changes reflected increased prices and costs and ensured a fairer user pays based scheme where the top end of the market - homes worth more than $300,000 - attracted proportionately higher premiums than someone constructing a modest home for $160,000.

“For 85% of consumers with contracts under $200,000 the increase in premiums will be 4.6 – 6%,” he said. “Someone building a $150,000 home will see their premiums rise $67.50 to $1155 in total for a six and half year policy – a rise of less than $1 a month.”

Mr Schwarten said the new changes ensured all Queenslanders were better protected and paid a fairer, more equitable premium based on the value of what they built.

“For 28 years the BSA has been the market leader in Australia for the provision of home warranty insurance” he said.

He said the $400,000 policy benefit was real consumer protection, recognising modern pricing costs and he challenged private insurers in other states to match it and ensure home builders were properly covered if something went wrong.

“Home warranty insurance in Queensland is about protecting consumers, not lining the pockets of insurers,” Mr Schwarten said.

“Queensland maintains the only effective home warranty insurance system in Australia, and it is jealously looked upon by interstate regulators, building contractors and consumers as the ideal service model.”

Media contact: David Burley 0408 717 887 
                           Ian Jennings 0417 607 064

September 29, 2006