Boutique Lawyers have recently undertaken a series of domestic building insurance claims, with an influx of clients wanting to seek justice for their improperly built apartments and houses.
Most people are not aware that they have a Domestic Building Insurance Policy on their home valued between $200,000 and $300,000 where they can claim for defective works or incomplete works for 6 years and 6 months after their occupancy permit has been issued or more in some instances.
YOUR RIGHTS
1. What is Domestic Building Insurance? Understanding the backbone of a claim;
Don’t confuse this Domestic Building Insurance with home and contents insurance or construction insurance, but it is distinct from any other form of insurance as it is taken out by the builder, before the build, for the purposes of protecting you in the event that the builder disappears, dies or becomes insolvent. The insurer is usually VMIA in Victoria. Domestic Building Insurance also applies for 6 years and 6 months and sometimes longer, after you have moved into the property. For instance, if your property has serious structural defects and you just moved into it 3 years ago and the builder has gone into liquidation, rest assured you can claim up to $300,000 on your insurance policy.
The warranty on this insurance is for a duration of 2 years for non-structural defects and 6 years and 6 months for structural defects however it is arguable on whether there is a limitation as to when you can make a claim. The period of cover starts on the date of the occupancy permit being issued.
If the dwelling is incomplete and an occupancy permit has not yet been issued, you are still covered for any defective as well as incomplete works, relocation fees. You can also claim legal costs for making the insurance claim.
Remember:
– DBI Insurance taken out by the builder, to protect you, the homeowner
– can be claimed in the event of the builder dying, disappearing of becoming insolvent and is unable to come back to rectify any of the work
– covers any defects/ incomplete works for up to 6 years (the loss or damage must arise within 6 years)
2. What can you actually claim and how to find out what you can claim;
Before making a claim, you will need to provide the insurer with a list of claimable items, in other words, defective and incomplete items of a structural and non-structural nature. These could be anything from a bumpy floor, to the slab being incorrectly poured or rotting wood within the structure.
There are also “other expenses” which can also be claimed as a result of you having to lodge the claim. The VMIA policy dictates that “reasonable costs” may be taken into consideration for the cost of the report required to lodge the claim, any legal fees incurred if you have engaged a lawyer to conduct the process, as well as expenses relating to relocation, alternative accommodation and storage costs for up to 60 days if you or your tenant is required to move out of home in order for the rectification to take place.
Remember; you can claim:
– Defective works – if structural up to 6 years of cover – if nonstructural up to 2 years of cover
– Incomplete works
– Reasonable legal fees for the claim process
– Cost of relocation, alternative accommodation and storage costs of up to 60 days if required
Keep in mind: There is ambiguity as to what period of cover is provided, and that you are out of time if you make a claim 6 years after the issuing of the occupancy permit, however, as long as the loss or damage occurred within the specified period, technically a claim can be lodged at any time (reasonably speaking), as the warranty is for loss or damage occurring in those 6 years, not a restriction on the time you have to lodge the claim. You must have evidence the defects arose within this period.
In order to get the most out of your claim, we recommend that you speak to lawyer who has experience with making such insurance claims since in most cases matters end up complicated.
3. Time frames associated with making the claim – 180 Days to Lodge the Claim
There are many essential time frames which ought to be considered when making a claim, the first of which is, how long you have to lodge the claim from the date you discover the builder has gone bust;
You only have 180 days from the date of finding out your builder has died, disappeared or become insolvent to lodge a claim, meaning you need to obtain adequate advice and reports as well as find all required documents.
4. Documents required to lodge the claim and where to find them
There are specific documents which are required to be lodged together with a claim form which support and uphold your claim. They vary slightly depending on whether the dwelling is completed (has an occupancy permit) or incomplete.
The required documents for a COMPLETE dwelling are as follows;
- Completed Claim Form – found on the DBI VMIA website
- Certificate of Insurance
- Certificate of Title of Property;
- Contract of Sale of Land and accompanying s32;
- Occupancy Permit;
- List of defects and incomplete items
- Receipt for the cost of the report
- Quote for alternative accommodation for 60 days
- Quote for storage facility for 60 days
- Quote for removal of contents
The required documents for an INCOMPLETE dwelling are as follows;
- Completed Claim Form – found on the DBI VMIA website
- Certificate of Insurance
- Certificate of Title of Property;
- Building Contract
- Variations to Contract
- Building Plans
- Any available permits and certificates (building permit ect..)
- All progress payments made to builder and evidence of payment
- List of Defects and incomplete items
- Receipt for the cost of the report
- Any relevant correspondence regarding the build
If you don’t have copies of these documents they can be obtained from the local council, the relevant building surveyor or a lawyer or conveyancer (if you purchased the property from someone else).
If the dwelling is not complete then the surveyor needs to be contacted to find out whether each stage of the build has been passed, issues with occupancy certificates may arise where a certain stage, such as slab has not been approved.
5. When will the insurer make a decision? How much will they pay?
The insurer (VMIA) have 90 days from the date the claim is lodged to provide you with their final decision.
The quotes that you obtain from any registered builder are good guidelines for calculating what the insurer is likely to offer.
Note that the VMIA policy is capped at $200,000, and since 2014 has been raised to $300,000 for insurance certificates taken out after that date. If you are unsure what your insurance is capped at, it is best to confirm with a legal practitioner. It is also possible for VMIA to engage a builder on your behalf, instead of providing monetary relief. This is in their discretion, but will most likely offer you a sum of money so that you can fix and complete your home.
If you have any other questions relating to DBI Insurance Claims, or are thinking of lodging one, please contact Boutique Lawyers on 1300 556 140 for your free 30 consultation.