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Public ‘Ripped Off’ In Builders’ Warranty Insurance SchemeA major overhaul of the Builders’ Warranty Insurance system is required as the current system is ineffective and consumers are being "ripped off," according to The Nationals. By Peter Hall - 13th September 2005 - Back to News Nationals Gippsland MP, Peter Hall, believes the current system is limiting the work builders can undertake, costing consumers a packet for virtually nothing in return and providing no insurance coverage for defective work.
In a speech to Parliament when debating the House Contracts Guarantee (Amendment) Bill, Mr Hall was scathing in his description of the Builders’ Warranty Insurance system and said that, as a Government-mandated scheme, the Government should do something about it.
"I would like to have some assurance that if the builder undertaking my job disappears, goes bankrupt or dies, there is some insurance cover, but it should not be at the premium levels that people are being required to pay now," he said.
"Let us make it very clear, and consumers need to be very clear, that the builders warranty insurance system we have in place at the moment is only a very limited insurance system. So too, therefore, should be the premiums that people pay."
However, Mr Hall said, this was not the case.
"The builders warranty insurance premium on an average house costing $250 000 is 1 per cent, or $2500. The maximum claim you can make on any builders warranty insurance, no matter what the cost of the house you are having built, is $200 000. That includes up to $100 000 in legal costs.
"So the collective sum of perhaps your uncompleted building work and the legal costs incurred cannot exceed $200 000 for the $2500, on average, premium you have paid."
He said in Victoria, consumers are paying $120 million a year. "We must ask: what for?
People in the industry who have done far more research than I have told me that nationally in the last three and a half years there have been just six claims on builders warranty insurance.
"Given the maximum claim is $200 000, that amounts to $1.2 million in claims (nation-wide) against premiums of $1.2 billion over that three and a half years."
"Consumers in Victoria are being slaughtered," he said. "If Victorians paid a premium of $50 on an average house, they would still generate $4 million a year. That would give insurance companies $4 million to pay out any claims. That is more than enough, and yet consumers in Victoria are being asked to pay $2500 on average where $50 would more than adequately cover any claims.
"With builders’ warranty insurance, consumers are being ripped off. It is a government-mandated scheme and this government refuses to do anything about it, despite the strenuous efforts of many people. "Consumers in Victoria are being hoodwinked, and it is about time the Bracks' government did something about it," he said.
Source: http://gippsland.com/ Published by: news@gippsland.com
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