BuiltIn forced to find new backer

A third building warranty has been hampered by its insurer pulling out of the global market.

However, the provider of the warranty, BuiltIn Insurance, says it has found another backer and is also extending coverage to other builders who lost theirs.

BuiltIn holds about 2000 warranties, and its customers include the 250-strong Combined Building Supplies Co-operative.

A builders warranty protects new home owners in case their building firm collapses during construction and the 10 years afterwards when builders must fix defects on a new home or major alteration.

BuiltIn follows Certified Builders and Stamford Insurance, which all had warranties backed by the underwriter, a subsidiary of Lloyds of London.

Certified Builders, which loses its coverage this week, has not been able to find an insurer.

Stamford, which lost its warranty on December 31, says it is close to announcing a replacement backer.

Both organisations stressed that existing policies would be honoured.

BuiltIn Insurance’s marketing manager Ben Rickard said his company had found a replacement backer with United Statesbased construction bond specialist Southern Pacific Insurance Corporation (Sopac).

He said Sopac saw significant growth potential in New Zealand’s chronic shortage of housing stock.

The fresh difficulties finding insurance have amplified calls for the Government to make building warranties compulsory.

After CBL Insurance’s liquidation last year, the only providers consumers have are BuiltIn, several group builders and the Registered Master Builder guarantee, which is provided by one of its subsidiaries.

Master Builder chief executive David Kelly said his organisation supported a mandatory warranty but felt consumers should still have options.

‘‘I think the critical thing is to look at who’s providing the guarantees, are they substantial, are they solid?’’

Certified Builders spokesman Jason McClintock also supported the mandatory warranty idea, saying the current situation left a big hole in the market.

‘‘We do need to fill this hole to better protect New Zealand consumers.’’

The Ministry of Building, Innovation and Employment (MBIE) said the mandatory warranty idea was ‘‘still under active consideration’’ and a decision was due later this year.

However, after ministry consulted the industry last year, there were concerns that New Zealand might struggle to find an insurer big enough to take on demand.