Senate wants home warranty insurance beefed up
The Senate Economics Committee has completed its eight-month inquiry into last-resort home warranty insurance by recommending better consumer protection measures for the product.
Home warranty insurance is compulsory for new homes built in Australia, and privatised last-resort schemes operate in most states, providing capped cover in the event the builder dies, disappears or becomes insolvent.
In response to claims the product fails to live up to the name, the Senate inquiry has recommended changes to the product, including renaming the cover to avoid misleading consumers.
It also proposes a nationally harmonised scheme of consumer protection in domestic building. The scheme would promote sound builder disciplinary procedures, quicker dispute resolution and add a fourth trigger to the insurance based on the builder’s loss of licence.
The committee recommends the Council of Australian Governments and the Ministerial Council on Consumer Affairs pursue a nationally consistent scheme to report home warranty insurance in detail.
Committee members suggest home warranty insurance be placed on the National Claims and Policies Database to placate demand for better public reporting of the product.
Insurers are also asked to provide consumers with better product information.
Some consumer and builder advocates are annoyed the inquiry didn’t go further and axe the mandatory scheme altogether.
The inquiry received 125 submissions, many from consumers dissatisfied with home warranty insurance after paying several thousand dollars for the product.
Green Senator Christine Milne says the overwhelming majority of submissions and evidence “confirmed that the product is fundamentally flawed”.
Consumer Action Law Centre Director Nicole Rich commended the proposed consumer protection improvements but questioned a lack of detail and timetable for implementation, and Builders Collective of Australia President Phil Dwyer told insuranceNEWS.com.au the committee “did nothing” to resolve the issue.
Victorian Liberal Party Northern Metropolitan member Matthew Guy told insuranceNEWS.com.au he is now pushing for a State Government inquiry into builders’ warranty cover.
Home warranty insurance is compulsory for new homes built in Australia, and privatised last-resort schemes operate in most states, providing capped cover in the event the builder dies, disappears or becomes insolvent.
In response to claims the product fails to live up to the name, the Senate inquiry has recommended changes to the product, including renaming the cover to avoid misleading consumers.
It also proposes a nationally harmonised scheme of consumer protection in domestic building. The scheme would promote sound builder disciplinary procedures, quicker dispute resolution and add a fourth trigger to the insurance based on the builder’s loss of licence.
The committee recommends the Council of Australian Governments and the Ministerial Council on Consumer Affairs pursue a nationally consistent scheme to report home warranty insurance in detail.
Committee members suggest home warranty insurance be placed on the National Claims and Policies Database to placate demand for better public reporting of the product.
Insurers are also asked to provide consumers with better product information.
Some consumer and builder advocates are annoyed the inquiry didn’t go further and axe the mandatory scheme altogether.
The inquiry received 125 submissions, many from consumers dissatisfied with home warranty insurance after paying several thousand dollars for the product.
Green Senator Christine Milne says the overwhelming majority of submissions and evidence “confirmed that the product is fundamentally flawed”.
Consumer Action Law Centre Director Nicole Rich commended the proposed consumer protection improvements but questioned a lack of detail and timetable for implementation, and Builders Collective of Australia President Phil Dwyer told insuranceNEWS.com.au the committee “did nothing” to resolve the issue.
Victorian Liberal Party Northern Metropolitan member Matthew Guy told insuranceNEWS.com.au he is now pushing for a State Government inquiry into builders’ warranty cover.