Legislation dealing with builders' indemnity insurance

17/2/96

Legislation requiring home builders to have compulsory indemnity insurance to protect consumers will be introduced into State Parliament this year.

Fair Trading Minister Cheryl Edwardes said Cabinet had approved the drafting of the necessary amendments to the Home Building Contracts Act.

The new laws would be accompanied by an education program to ensure widespread awareness of the new requirements for builders.

The State Government and the home building industry would work together to ensure builders were aware of their responsibilities and home buyers were aware of their rights.

"This initiative was a pre-election commitment and has widespread support from industry and consumer groups," Mrs Edwardes said.

"It is pleasing that industry is so committed to this measure, which will provide increased security for consumers who build or buy new homes.

"The accompanying education program will be co-ordinated by the Ministry of Fair Trading but will essentially be a joint Government-industry initiative.

"Compulsory housing indemnity insurance will provide security for home buyers' money should a builder go out of business during the construction period or the post construction six-year warranty period.

"Current voluntary insurance schemes cover only 44 per cent of new homes and extensions.

"Under the proposed new laws, builders will be required to take out insurance cover for all home building work over $10,000 and will not be able to obtain local government building approval without a certificate of insurance.

"The insurance cover will be provided entirely by the private sector and it is expected that the increased coverage of the building industry will keep premiums down."

The chief executive of the Housing Industry Association (WA Division), Mr John Dastlik, said the association and its members welcomed the announcement and fully supported the introduction of compulsory housing indemnity insurance.

"This initiative follows trends around Australia towards compulsory cover prescribed in legislation and provided by the private sector," Mr Dastlik said.

"The HIA is committed to working with the State Government to inform the building industry of the new requirements and to ensure wide community awareness of the protection this insurance cover will provide."

Media contact:  Diana Russell-Coote 421 7777