Incomplete and Defective Works Audit Reports
Incomplete and Defective Works Audit Report
If your builder has gone broke, you may find yourself in a challenging and stressful situation, particularly if your building project is left incomplete or with defective works. In such cases, it is crucial to understand how Domestic Building Insurance (DBI) can protect you.
DBI, which is underwritten by VMIA, provides coverage when a builder is unable to complete the work due to insolvency and if a building project (including construction, renovation, or extension) has a contract value of $16,000 or more, the builder is legally required to obtain DBI on behalf of the homeowner before starting the work.
To initiate a claim, you will likely need an Incomplete & Defective Works audit, which assesses the extent and quality of the unfinished and defective construction.
What's Insured if your Builder Goes Broke
Incomplete Works:
If your builder becomes insolvent and is unable to complete your home, DBI will cover the costs required to finish the construction. This ensures that you have the necessary funds to hire another builder to complete the work.
The amount of the insurance is typically capped at 20% of the original contract price. This cap is intended to provide you with sufficient funds to engage another builder to complete your home. The 20% cap reflects the expected additional costs associated with finding a new builder and covering any price increases or unforeseen expenses needed to complete the work.
For example, if the original contract price was $100,000, the maximum amount that DBI would cover for incomplete works would be $20,000.
To make your insurance claim, New Home Building Inspections will prepare a report detailing all tasks that were not completed according to the original contract. This comprehensive report will support your claim by clearly listing the incomplete work and providing the necessary evidence for the insurance process.
Defective Works:
It is not as widely know that DBI also covers the cost of rectifying defective or poor-quality work done by your builder that has gone broke. The maximum that DBI will cover is a total of $300,000 (this includes any amounts paid for incomplete works).
Types of defects:
Non-Structural Defects: DBI covers non-structural defects for up to two years from the date of completion of the building work. This includes issues that may not affect the building’s structural integrity but still need correction.
Structural Defects: DBI provides coverage for structural defects for up to six years from the completion of the building work. Structural defects are issues that could impact the building’s stability or safety, such as foundation problems or major cracks.
To make your insurance claim, New Home Building Inspections will prepare a report detailing all defects – both structural and non-structural. This comprehensive report will support your claim by clearly listing the work that needs to be rectified and providing the necessary evidence for the insurance process.
With New Home Building Inspections comprehensive Incomplete and Defective Work Audit Report, you will be well positioned to submit a strong insurance claim. We will work closely with you throughout this stressful time to make the process as smooth as possible.
Importantly, fees incurred in making a successful claim under the DBI Policy may also be covered.