Insurance plan to beat leaks

[Guest guest]

http://www.nzherald.co.nz/storydisplay.cfm?storyID=2347059 & thesection=news & t

hesubsection=general & reportid=562587

Insurance plan to beat leaks

31.07.2002

By ANNE GIBSON and ANDREW LAXON

New home buyers face paying up to $10,000 extra for insurance cover against

leaks or rots in their houses.

A group of top Auckland property developers said yesterday that anti-rot

insurance could be the only way to give buyers peace of mind.

But the Auckland Property Group's suggestion was ridiculed as a waste of

money by Consumers Institute chief executive .

" Isn't this a gross indictment of the building industry and design industry

of New Zealand that they are essentially admitting that buildings are going

to leak?

" They should be ashamed of themselves. "

The Auckland Property Group is made up of big developers who do about $400

million worth of building in Auckland each year.

Its members include Metropolis developer Krukziener, Tim Manning of

Taradale Properties, Nigel McKenna of Melview Developments, Jim Speedy of

Covington Group and Kerry Knight of law firm Knight Coldicutt.

Spokesman , of Brothers, said the building industry needed

to offer a new type of guarantee for buyers, as insurance companies did not

generally cover leaky buildings.

The group proposed that developers take out defects liability insurance.

The reinsurance firm involved would demand certain design specifications and

a high standard of workmanship.

" We're scouting for the big firms in Australia, and estimate this could add

as much as $10,000 to the purchase of a new unit, " Mr said.

" But then at least buyers know they won't have a leaky home or unit. We

believe buyers will pay that premium for the peace of mind. "

Mr also confirmed Herald reports that growing numbers of angry leaky

home owners are planning legal action.

He said the body corporates of many Auckland apartment blocks which leaked

were suing developers, materials suppliers, building materials manufacturers

and builders.

The litigation involved millions of dollars.

Mr said the group wanted to improve design to combat the leaky

buildings problem, which some experts believe could affect up to one in 10

new houses, particularly in high-density residential developments.

" We are looking at designing our own system to ensure plastered buildings

don't leak and getting the Building Research Association and the Government

to enforce the new rules. "

Mr said the leaky building problem was caused by many people at many

stages in design and construction and developers were only partly

responsible.

" We need to look at faulty workmanship by builders, poor design by

unqualified architects who don't have the technical experience in

waterproofing, the failure of the Building Research Association to identify

suppliers of products and systems which are likely to fail and the use of

untreated timber in exterior walls without a supporting system to compensate

for it. "

The Building Research Association's weathertightness manager,

, said the association had not found any faulty products. Problems

occurred when they were applied incorrectly or in unusual ways which the

manufacturers may not have intended.

Mr described the $10,000 guarantee proposal as a back-door approach

to the problem and questioned whether insurers would want to take on the

risk.