1. What should you know while looking to rent or buy a property?
- How defects might influence the underwriting assessment of insurance for your building
- What kind of risks associated with defects may compromise the safety of your building as they may also affect your personal finances and expose you to legal action
- What kind of defect-related exclusions may be present in your insurance contracts and whether these are clear, hidden or ambiguous
- What your builder’s approach may be to rectify any defects that may be found. A proactive approach for rectification will maximise insurance coverage and avoid the risk of a claim denial due to defects.
2. What information is required by insurance providers to evaluate defects?
To determine if you have adequate insurance coverage and what kind of coverage may be suitable for you, insurers will need all kinds of information that can help reveal the extent and severity of the defect. Hence, you must secure information and documentation such as:
- Professional reports
Your insurer may request you to provide a builder’s scope of works to rectify the defects, engineers’ reports, and any compliance certifications you may have.
- Building contracts
If a building contract exists, it will provide details on the work required to rectify the defect and the value of remedial works. Depending on the contract value of works, most insurance policies have exclusions for building works exceeding a certain value (often over $500,000)
- Minutes of committee/body corporate meetings
From the minutes of a committee or body corporate meeting, insurers will be able to determine if:
- The owners corporation or body corporate has taken any action to enable remedial work. Have they sought the help of an inspector or engineer to provide reports? Have they appointed a contractor to carry out remedial works?
- There have been delays or lapses in initiating remedial work – when was the date for commencement of remedial works?
- Any special levies have been raised to fund the work