Owners making a claim under the Builders Warranty Insurance (BWI)
When you undertake a building project, you expect the builder to see to the project until it is completed. However, if your builder becomes insolvent, dies or disappears, it is not the end of your project!
A Ministerial Order issued in May 2003 pursuant to the Building Act 1993, provides for the conditions upon which a Builder can undertake domestic construction. Specifically, it provides for obtaining and providing to the owner Builders Warranty Insurance (BWI). This provides insurance for owners to make a claim if their builder is insolvent, disappears or dies. Recently there has been a change to the Order that also provides for a claim by the Insurer to be accepted if an owner obtained a Tribunal’s order against their Builder and that Builder has refused to comply with the Order.
You should have BWI if your domestic building contract is for construction (or alteration) of a dwelling for a value that is more than $16,000 (since 16 June 2016). Prior to this date, BWI applied to any Domestic Building Work that was over $12,000.
Who arranges BWI?
The builder should arrange and pay for BWI before you pay them any money, including any deposit, under the Domestic Building Contract (the contract).
The insurer will send you the certificate and policy once the cover is obtained. It is important to check that the amount of the building works in the certificate is the same as the amount in the contract, and the name of the builder is the same in the certificate as the one stated in the contract.
What are limitations of BWI?
The amount claimable under BWI is limited. The time to make a claim is also limited to 6.5 years of the date the certificate of occupancy or certificate of final inspection is issued.
Within that time, if your individual builder dies or disappears, and you incur increased costs to finish the dwelling, you should make a claim under the BWI. We can help you prepare your claim.
What if you do not receive your payments from BWI?
Not only can we help you make the claim for payment of your entitlements pursuant to the BWI, we can also help you with VCAT proceedings to review any Insurer’s decision that rejects your claim.
For more information, call us on 9555-7233.
This article provides information that is general in nature and is not a substitute for legal advice.