Tasmania seeks input on new home warranty scheme

9 May 2022

The Tasmanian Government has opened consultations on plans to re-introduce a home warranty 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 brokerages.

“Benefits of this model include the reliance on insurance industry knowledge and experience, and the possibility of establishing a model within a relatively short period of time due to existing specialist resources within the market,” the paper says.

The proposed model would apply in the immediate term, while the paper also suggests that legislation should allow for competition between market participants over time.

Home warranty insurance, covering incomplete or defective building work in the event that a builder has died, disappeared or become insolvent, hasn’t been offered in Tasmania since a previous scheme was abolished in 2008 after surging premiums.

But high-profile construction firm failures and stress caused to home buyers has led to plans to introduce a revised scheme.

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

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

The discussion paper proposes that home warranty insurance would be mandated for residential building work contracts valued at $20,000 or greater and suggests a claim limit of 5% for deposits and 20% for incomplete or defective work up to a maximum of $200,000.

The scheme would have a claim and warranty period of six years and work that exceeds three storeys would be excluded, the paper proposes.

More information is available here.