Tasmania Seeks Comments on New Home Warranty Scheme – Regulation & Government Insurance News

Tasmania invites comments on new home warranty scheme

May 9, 2022

The Tasmanian government has opened consultations on plans to reintroduce a guaranteed home insurance scheme in the state.

A discussion paper proposes a contract manager model, which relies on one or more experienced market insurers providing risk assessment and administration services, often supported by independent brokers.

“The advantages of this model include the reliance on knowledge and experience of the insurance industry and the ability to establish a model in a relatively short timeframe due to existing specialist resources in the market,” indicates the document.

The proposed model would apply immediately, while the paper also suggests that the legislation should allow competition between market players over time.

Home warranty insurance, covering incomplete or defective building work in the event of the death, disappearance or insolvency of a builder, has not been offered in Tasmania since a previous scheme was abolished in 2008 after soaring premiums.

But high-profile construction company bankruptcies and the stress caused to homebuyers have led to plans to introduce a revised scheme.

“Given some recent cases of insolvency, this has become a sensible measure to help consumers in circumstances where this has happened,” Workplace Safety and Consumer Affairs Minister Elise Archer said.

Ms Archer says the reintroduction of insurance will add to protections under a building regulatory framework, while other reforms are also in the works in relation to defects and litigation.

The discussion paper proposes that home warranty insurance be mandatory for residential construction contracts worth $20,000 or more and suggests a claim limit of 5% for deposits and 20% for incomplete or defective work up to a maximum of $200,000.

The program would have a six-year claim and warranty period and work that exceeds three floors would be excluded, the document proposes.

More information is available here.

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