The NSW Supreme Court confirms home warranty insurance rights

courthouse judgesHome warranty insurance generally protects an owners corporation from being out of pocket for the cost to repair building defects where the builder has been made bankrupt.

In other words, home warranty insurance is intended to allow an owners corporation to be indemnified by the insurer for any loss it suffers as a result of incomplete or defective building work where the builder has become insolvent.

But what happens when an owners corporation makes a home warranty insurance claim after the builder’s bankruptcy ends? Is it then too late for the owners corporation to make the insurance claim? The answer is “no” according to a very recent decision of the NSW Supreme Court.

Our friends over at JS Mueller & Co have written an extensive case study (the Lumley case) which provides details for those who are interested.

Hit this link for the full article.

In summary, the Court’s decision confirms that owners corporations will generally be able to lodge home warranty insurance claims within the required time limit even if the claim is lodged after the builder’s bankruptcy has ended. The Lumley case also confirms that once a home warranty insurance policy has been triggered, the insurer generally cannot claim that the trigger has been undone because of subsequent events, such as the builder’s bankruptcy having come to an end.