QBCC Home Warranty Insurance claim exclusions

Part 5 of the Queensland Building and Construction Commission Act 1991 (Act) establishes a statutory insurance scheme, the purpose of which is in certain situations to provide basic assistance to consumers of residential construction work for loss associated with work that is defective or incomplete.

As part of the building process, the builder pays a premium to the Queensland Building and Construction Commission (QBCC) to insure the residential construction work, the amount of the premium being included as part of the contract price and paid to the QBCC before the residential construction work commences.

What is the basic requirement to be covered by the QBCC Home Warranty Insurance scheme?

Earlier articles by Dundas Lawyers have discussed what is and isn’t covered under the QBCC Home Warranty Insurance scheme and what needs to be done to obtain coverage.   Generally there must be a written contract for residential construction work, the contract must bear the licence number of a QBCC licensed contractor and the contractor must be licensed.  That said, there are many examples of domestic type building work excluded from coverage under the QBCC Home Warranty Insurance scheme, as illustrated in the case of Rajagopal v Queensland Building and Construction Commission [2020] QCAT 154 (Rajagopal).

The Rajagopal case

In Rajagopal, the Applicant in May 2012 entered into a domestic building work contract for the construction of his new house.  The contract included the construction of a driveway.  Practical completion was reached on or about 6 March 2013, but by February 2018 the Applicant observed the driveway had subsided.  The QBCC accepted the driveway was defective and issued a direction to rectify to the builder, however it went into liquidation and the defect remained unremedied.   The Applicant submitted a claim for the defective works in reliance upon the QBCC Home Warranty Insurance scheme but this was rejected by QBCC and so the Applicant sought a review of that decision by QCAT.

Under the contract, the driveway slab was to be physically connected to the dwelling slab.  The insurance policy conditions prevailing at the time the parties entered into the contract provided that QBCC would pay the cost of rectifying subsidence or settlement damage to residential construction work which was primary building work but it was not liable for subsidence or settlement damage to residential construction work that was associated building work (as both those terms were defined in the regulation prevailing at the time of contracting).  At the relevant time, associated building work included the installation of driveways and paths.

Unfortunately for Mr Rajagopal, the Tribunal upheld the decision of the QBCC to deny his Home Warranty Insurance claim on the basis that the driveway was excluded under the 2012 regulation.

Takeaways

Fortunately for those looking to enter into domestic building contracts today, the operation of the current Act would result in a different outcome in that under section 67WC(2) of the Act, associated work that was previously excluded from the Home Warranty Insurance scheme is now associated insurable work, but only if it is carried out under a contract that includes over $3,300.00 of primary building work.

In other words, if the construction of a driveway forms part of the contract for the construction of a home, then the driveway would be associated insurable work and would now be covered under the Home Warranty Insurance scheme.  However, if the installation of the driveway, or for that matter other associated work (such as fencing or landscaping) is performed in isolation, then it will not be covered by the Home Warranty Insurance scheme.

Links and further references

Legislation

Queensland Building and Construction Commission Act 1991 (Qld)

Related insights

Termination for incomplete construction work

QBCC Home Warranty Insurance Claims – part 1

QBCC Home Warranty Insurance Claims – part 2

QBCC Home Warranty Insurance Claims – part 3

Further information

If you need assistance regarding the QBCC Home Warranty Insurance scheme, please telephone me for an obligation free and confidential discussion.

Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.