The New Zealand Certified Builders Association (NZCB) has dropped its Halo insurance policy’s builder insolvency cover, RNZ reports.
NZCB said it had no choice after Lloyd’s of London, the underwriter of the policy, pointed out that it could only either drop the cover or let its members’ premiums skyrocket.
Grant Florence, chief executive at NZCB, said increasing the premiums would be a bad decision as builders and consumers are already under financial stress from building materials and compliance costs.
He added that they did not expect the situation to become a major issue as insolvency claims were rare for NZCB members anyway and there was still completion cover for other events. Moreover, the insurance policy still covers 10 years of structural and non-structural defects.
“The cover’s still there if a builder dies or if a contract is cancelled, or for example if a builder is legally incapacitated,” Florence told RNZ.
Florence said that homeowners still have other ways to protect themselves despite lacking insolvency cover.
“They can make sure they’ve got a contract in place and also making sure that the payment schedule that they agree to minimises the risk if a builder does go under before the work’s completed,” he said.
However, he confirmed that they’re searching for a second underwriter for the insurance policy.
“We’re very active on that now. The reasons why we put this Halo in place was that we wanted to give peace of mind to homeowners and our efforts will continue to do that, to find that, so that we’re able to bring this back to the market,” Florence concluded.
