The new home market is one of the most competitive commercial markets in Australia.
Increased competition and the downturn in new home starts has Builders transforming their traditional home packages into bespoke designed and engineered homes to meet new market demands.
No longer are bespoke designed homes reserved for the top end of town, builders are now playing in a field that brings additional risks that they do not understand or properly insure for.
Residential Builders are quite often now providing design services with in-house Designers, Architects and Engineers or partnering with external firms to integrate these services seamlessly to provide their clients the “under one roof” experience in their bespoke home design.
The Builder can inherit what is known as a vicarious liability to professional services such as design and engineering, which previously may not of been as prominent in their business.
Protect your brand.
Not having adequate insurance arrangements or financial reserves to meet these risks can bring the Builders brand into the lime light for the wrong reason with the volume of information now available, online reviews and other social media avenues a client can express their dissatisfaction in a public domain.
Insurance protection is really as much about having the financial means to rectify the costs quickly and protecting the Builders brand against long drawn out disputes that can potentially damage the Builders brand equity.
The list below are examples of exposures that Builders are experiencing.
Design Exposures. A home is built to design, but the design elements are in breach of code, bi-laws or covenants. It is common for the builder to act as a conduit of information between Client, Council and the Designer or if providing the design service in-house they are then considered the Designer.
Exceeding the height limit. Building a home that exceeds the height limit specified on the covenant on the land title is a common scenario which can cost the Builder hundreds of thousands of dollars in rectification and compensation.
Engineering risks. Engineers in their assessment of foundation design, dewatering, structural and other critical assurances and / or advice on the appropriate design and build techniques required to achieve the end result.
Noise pollution. Excessive sound between semi-detached walls or through floors to lower levels in multi-unit developments. There are specific tests and codes that govern appropriate noise levels within buildings. Retrofitting corrective measures can be very costly.
What is the Solution?
Builders need to discuss with their Insurance Broker the above risks and other similar exposures. The most likely outcome is the Builder will include Professional Indemnity into their insurance program for their design and construct exposures both directly and vicariously.
For more information on how SRG can assist please contact Rod Fitzgerald or click here for more information.
Rod Fitzgerald
P: 1300 551 969
thesrggroup.com.au