What is the Master Builders "Fidelity Fund Insurance" Scheme

Posted on 15 October, 2014 in Insurance

Fidelity Fund insurance is also known as "home warranty insurance" in other states within Australia. It was introduced in the Northern Territory at the beginning of 2013, with the aim of providing consumer protection for owner of new home builds and extensions of existing homes as well as providing general consumer confidence in the building industry.

The fidelity fund certificate provides cover from the consumer against financial loss because of incomplete or defective works if the builder disappears, dies, become insolvent or becomes deregistered.

At commencement of a new project, a Builder applies on behalf of the client for a Fidelity fund certificate. The cost of the fidelity find insurance is proportional to contract value of the project. To support the application, the builder must demonstrate that they have the financial capacity to undertake the project. Any project over the value of $12000 requires fidelity insurance.

As you may have heard in the news recently, two Darwin building companies have gone into liquidation. (Two NT building companies go into liquidation leaving homes unfinished by: CLAYTON BENNETT, From: NT News, September 27, 2014).This has left a number of their existing clients with unfinished building projects which is in an upsetting situation as well as causing a ripple effect of reduced consumer confidence in the building industry locally. Luckily the fidelity insurance scheme, protects these consumers and will ensure all projects are completed by alternative builders who have been approved by the Master Builders Fidelity Fund as capable of completing the project.

The Fidelity Fund has since launched a campaign to help educate the consumers who are looking to build a new home or undertake a renovation. See the tips below.

Tips to consider when undertaking a new home build or renovation

  • Do your research when choosing a builder - speak with their previous clients as word of mouth goes a long way.
  • Don’t pay deposits of more than 5% - follow the progress payment schedule outlined by the Building Board
  • Don’t pay for work that hasn’t been completed
  • Understand how variations work if you change your mind during construction
  • Use reputable builders for new homes and extensions; doing it yourself may end up costing you more.