Builders Collective Australia

Background information

There have been over 35 Government reviews of Last Resort Home Owners Warranty. Described by Choice magazine as "junk insurance policies", both consumers and builders continue to be adversely impacted in every state except Queensland and Tasmania. (Tasmania only recently dumped warranty insurance, through the lobbying efforts of the Greens and the Builders Collective).

Yet again we were appalled at the comments made by the Deputy President of the Victorian Civil and Administrative Tribunal Victoria when handing down this judgement in March 2009.

“I appreciate this is an unfortunate outcome for the owners, and potentially for other beneficiaries under similar policies of warranty insurance. I agree with counsel for the owners that their inability to recover the costs of the earlier proceeding under the policy means that the fruits of their unsatisfied judgement are effectively lost, and that it is not surprising that homeowners are somewhat disenchanted with the current regime”.

Said Ms Aird, Deputy President of the Victorian Civil and Administrative Tribunal Victoria

This outcome mirrors that of consumers in NSW. A recent case funded by the Office of Fair Trading (OFT) for one of their own awarded just $60,000 to meet a repair cost of $167,000. This took 6 years! The irony is that even OFT can’t make the scheme work! The house cannot be lived in and the consumer now faces foreclosure because he can’t sustain both mortgage and rental payments.

Had this person lived in Queensland the timeframe would have been 28 days with no cost to him. The Queensland system provides effective industry management and consumer protection.

The Federal Ombudsman's Report of 2008 concludes that this is the worst performing insurance product in Australia by a massive 1250%. These official statistics are undeniable and incontrovertible.

A bipartisan position must be taken to remove Last Resort Mandatory Home Warranty Insurance now.