The Insurance Council of New Zealand (ICNZ) says people whose homes are built on slabs containing substandard steel mesh should not be “unduly concerned” about their property cover.

Earlier this year it emerged hundreds of thousands of non-complying steel mesh sheets had been supplied to builders since 2012.

However, amid growing public alarm, ICNZ CEO Tim Grafton says substandard mesh does not necessarily mean homes fail to meet the Building Code.

“This is because a number of factors will be assessed when determining the overall resilience of the house,” he said.

He says the Ministry of Business Innovation and Employment advised building consent authorities in March that if a house has a code compliance certificate there is no need to take action, because the house will still meet the structural and life safety requirements of the Building Code.

Mr Grafton says insurers typically rely on compliance certificates issued by councils to provide confidence around structural integrity.

Lawyer Adina Thorn, backed by London-based Harbour Litigation Funding (HLF), recently launched a class action against the mesh suppliers, including Steel and Tube in New Zealand.

Ms Thorn says HLF completed due diligence before backing the action and found the mesh could have insurance implications.

She told radio network RNZ most home and contents insurance requires buildings to be legally compliant.

“These buildings are arguably not legally compliant because of the steal mesh, [so] there needs to be compensation for that risk,” Ms Thorn said.

Steel mesh standards were tightened after the Canterbury earthquakes to reduce damage in future events.

Mr Grafton says home insurance policies generally don’t provide cover for faults in materials, “but will cover resultant damage”.

IAG New Zealand spokesman Craig Dowling says the insurer is “keeping a watching brief” and will comment as more facts become available.

The country’s system of steel testing has also been called into question, with calls to adopt Europe’s more stringent regime.