Building guarantees

Building guarantees are marketed as peace of mind you’ll be covered if the build suddenly goes pear-shaped. But the cover they provide might not be as good as you think.

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If you want extra protection during a home build, you’ll usually have to put your hand in your pocket and buy a building guarantee. These guarantees are marketed as peace of mind you’ll be covered if the build suddenly goes pear-shaped. But the cover they provide might not be as good as you think.

Under cover

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What’s included

Financial backing

Legal rights

Change needed

Full build guarantees

Name Price Provider DURING BUILD: Loss of deposit (whichever is less) DURING BUILD: Non-completion (whichever is less) AFTER BUILD: Defects (whichever is less) AFTER BUILD: Rot and fungal decay
Halo 10-Year Residential Guarantee Insurance $1201.75 New Zealand Certified Builders Up to 20% of contract price or $500,000 Up to 20% of contract price or $500,000 Cost to repair or replace (structural and non-structural) Covered if result of defect
Master Build 10-Year Premium Guarantee $2950.00 Master Build Services Up to 5% of contract price or $40,000 Up to 10% of contract price or $100,000 Up to contract price or $1,000,000 for 10 years (structural) or 3 years (non-structural) Covered if result of defect
Master Build 10-Year Standard Guarantee $1300.00 Master Build Services Up to 5% of contract price or $20,000 Up to 10% of contract price or $40,000 Up to contract price or $400,000 for 10 years (structural) or 2 years (non-structural) Covered if result of defect
Signature Homes Building Guarantees Included in building contract Residential Indemnity Cost to complete project Cost to complete project Unlimited for 10 years (structural) or 2 years (non-structural) Covered if result of defect
Stamford 10-Year Building Warranty $2012.50 Stamford Insurance Up to 10% of contract price or $150,000 Up to 10% of contract price or $100,000 Up to contract price for 10 years (structural) or 2 years (non-structural) Covered if result of defect

GUIDE TO THE TABLE PRICE is based on a building contract of $350,000 and includes GST. COVER DURING BUILD and COVER AFTER BUILD is the maximum cover offered by each guarantee and depends on the limits and terms stated in each guarantee.

Homefirst underwriter liquidated

As many as 10,000 people with Homefirst 10-year building guarantees were left high and dry after the insurance underwriter, CBL Insurance, was put into liquidation.

Homefirst guarantees were provided by BuiltIn Insurance and also sold by New Zealand Certified Builders until the organisation launched its Halo guarantee in 2016.

In February 2018, the Reserve Bank asked the High Court to appoint interim liquidators to CBL. The company was operating below minimum solvency requirements and was required to get Reserve Bank approval for major transactions. But it ignored the bank’s directions and paid $55 million to two other entities, a move the Reserve Bank said may have benefitted some creditors over others.

Based on preliminary financial information, liquidators McGrathNicol said Homefirst policyholders “should be aware there may be insufficient funds available to meet in full any claims”.

BuiltIn Insurance said Homefirst customers who have signed a building contract and paid a deposit or have homes under construction can purchase replacement cover from Stamford Insurance, underwritten by Lloyd’s of London. Stamford will also consider applications from homeowners if their house is less than 12 months’ old.

Stamford’s terms and conditions will apply and customers will need to sign a declaration that “they know of no circumstances which could give rise to a claim”. Policyholders should contact BuiltIn Insurance to arrange cover.

BuiltIn said it’s seeking an alternative for Homefirst customers whose build was completed more than 12 months ago. The company is accepting new applications for Homefirst guarantees, though these policies will be backed by Lloyd’s of London.

Policyholders can find out more information about the liquidation and contact details for the liquidators here.

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