As part of the regulation of Queensland’s building industry, the Queensland Building and Construction Commission (QBCC) administers a home warranty scheme to provide insurance cover for residential construction work in Queensland. Such is governed by the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act).
Recently various regulatory reforms have been made to the home warranty scheme effective as at 28 October 2016.
With Thomson Geer currently acting on behalf of the QBCC in matters relating to the home warranty insurance scheme, we have provided below an overview and general information of the recent amendments to contractors and consumers alike.
The key amendments to the scheme can be distilled as follows:
- Firstly, the scheme has expanded its cover to include additional works;
- Secondly, consumers can now optionally increase the amount of cover by payment of a separate premium to the QBCC;
- Thirdly, the method and timing of payment of the insurance premium has changed.
It is important to note that whilst the amendments are effective as at 28 October 2016, the amendments to the scheme will apply to the work having regard to:
- The date contract was entered into;
- The date the premium was paid;
- The date works commenced.
Relevantly, where any of the above events took place prior to 28 October 2016, the legislative provisions, insurance policy conditions and premium amounts prior to that date will apply.
Expansion of cover to include additional work
Following the amendments, additional works now covered by the scheme broadly include:
- The installation of a manufactured home fixed to land in a residential park.
- The erection, construction or installation of a standalone residential swimming pool.
- For a residence or related roofed building:
- All building work performed within the building envelope (which applies to both the internal or external parts of the building).
- Anything attached to the building if it requires building approval or plumbing approval.
- Any structure attached to the external part of the building where there is no other supporting structure.
- Stairs or access ramps which are permanently attached to the building.
- In relation to plumbing and drainage for a residence or related roofed building:
- Building work for the primary water supply.
- Building work for sewerage or drainage.
- Stormwater drainage.
Note that in relation to the additional works, they must be for a value of over $3,300 and must be carried out by a licensed contractor, or by an individual where fraud or certain representations are made.
Separate premium for optional additional cover
Prior to the amendments, the standard insurance cover was a maximum of $200,000. Now, consumers have the option of increasing their cover by paying an additional premium to the QBCC. The following increased cover is now available to consumers:
Total Cover From 28 October 2016 Prior to practical completion $300,000 (up from $200,000) After practical completion $300,000 (up from $200,000) For fire, storm and tempest $300,000 (up from $200,000) Allowance for accommodation (Note that this amount is included in the total) $10,000 (up from $5,000)
The above cover assumes a standard house. It is worth noting that previously, the calculation of the insurance premium was premised on the contract price or the value of the works. Following the amendments, the premium is now calculated on the insurable value of the works which is defined in the QBCC Act as “…an amount representing the reasonable cost to the insurer of having the work carried out by a licensed contractor on the basis that all building and other materials are to be supplied by the contractor (whether or not the work is carried out by a licensed contractor on that basis)“. For more information on the optional additional cover premiums as at 28 October 2016, refer to the insurance premium table for optional additional cover.
In order for the consumer to be eligible for the optional additional cover, it is a precondition for the standard premium to be first paid by a licensed contractor, and then for the consumer to pay the additional premium within 30 days of entering the contract, or prior to the work starting (whichever is earlier).
Paying the insurance premium
Prior to the amendments (i.e. pre 28 October 2016), the QBCC Act required that the appropriate premium be paid “as soon as practicable after the contract is entered into with the consumer.” That requirement has now changed, the result of the amendments to the QBCC Act being that the premium must be paid before the earlier of 10 business days after the contract date or commencement of the work. As for payment of the premium, the amendments now require a licensed contractor to collect the appropriate insurance premium from the consumer and pay it to the QBCC on behalf of the consumer.
For more information on the standard insurance premiums available from 28 October 2016, refer to the insurance premium tables for new home constructions, and for alterations, additions and swimming pools.