Poor quality property developments could drive up cost of home insurance

Urging the government to clamp down on poor quality property developments, the Insurance Council of Australia (ICA) has warned homeowners that they may start to see their home insurance premiums because of the rise in buildings constructed with questionable materials.

In a recent submission to a Senate Inquiry on Non-Conforming Building Products (NCBP), the ICA said that insurers see the use of substandard materials as an emerging risk.

According to the insurance body, when NCBPs go undetected they can pose a threat to tenants and homeowners, as well as insurance providers financially because they aren’t factored into the customer’s risk assessment.

“Like the community, the general insurance industry critically relies upon building construction standards being delivered in a compliant manner,” said ICA’s CEO, Robert Whelan.

“Aside from the risk to the safety of occupants and emergency services, the installation of NCBP has the potential to increase insurance premiums and other associated costs due to the increased risk associated with their use.”

He added that the government should to consider taking a “national approach to policing and enforcement of existing regulations, including a national audit of buildings to detect and quantify the current level of exposure to NCBP.”

According to the Australian Buildings Code Board (ABCB), NCBPs are building products and materials that: 

  • claim to be something they are not;
  • do not meet required standards for their intended use; or
  • are marketed or supplied with the intent to deceive those who use them.

They can include materials such as roof panels containing asbestos and flammable cladding.

One recent example of cheaply constructed buildings causing harm to tenants was the devastating Grenfell Tower fire in London which killed 80 residents. An investigation by the British Government found that the tower was particularly vulnerable because it had combustible (flammable) cladding.

A similar level of threat could apply to certain types of buildings here in Australia. In an interview with ABC online, Chief executive of Fire Protection Association Australia, Scott Williams said that a similar threat could apply to low and medium rise buildings here in Australia as buildings 25 metres high or less aren’t required by law to have sprinkler systems or monitored fire alarms.

“Introduce to that flammable cladding and you have the most vulnerable building in Australia," he said.

If you suspect a non-conformance in your home or rental property, the ABCB suggests to lodge a complaint with jurisdictional contacts and consumer protection agencies in your state or territory.

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