Master Build Guarantee provides protection for homeowners when building or renovating in New Zealand. The guarantee covers defects, non-completion, and loss of deposit if your builder fails to deliver. Understanding this protection helps you evaluate builders and make informed decisions.
Building guarantees exist because construction is inherently risky. Builders can go into liquidation mid-project. Defects can emerge years after completion. Having guarantee protection provides recourse when things go wrong.
What Master Build Guarantee Covers
The guarantee has several components that protect different aspects of your build.
Loss of deposit cover protects money you have paid if your builder goes into liquidation before starting work. You can claim up to $50,000 in lost deposits, though claims are subject to specific conditions: the deposit must have been paid directly to the builder (not held in a trust account), the builder must be a current Master Builder member at the time of their failure, and you must have a valid building contract. This provides significant protection during the vulnerable pre-construction period.
Non-completion cover applies when your builder cannot finish the project due to death, disappearance, or insolvency. The guarantee covers the reasonable cost of completing the work, up to policy limits. The scheme also provides up to $10,000 for temporary accommodation if you cannot live in your home during the completion process. This protection means an unfinished project does not become your problem alone.
Structural defects cover lasts for ten years after completion. Structural defects discovered during this period can be claimed under the guarantee. The builder or the guarantee scheme pays for remediation, protecting you from bearing these costs yourself.
Materials and workmanship defects have a separate two-year warranty period. Non-structural issues like faulty fixtures, poor finishing, or defective materials installed during construction are covered for the first two years after completion. After two years, only structural defects remain covered.
Coverage Limits
Like any insurance product, Master Build Guarantee has limits. Understanding these limits helps you know what protection you actually have.
The standard policy provides up to $1,000,000 for structural defects, covering most residential builds adequately. Loss of deposit cover is capped at $50,000, and temporary accommodation during non-completion situations is covered up to $10,000. Larger or more expensive projects may require extended cover, available at additional cost.
Loss of deposit and non-completion each have their own limits and qualifying conditions. Reading your specific policy documents reveals exactly what protection applies to your project.
Not everything is covered. Defects that arise from normal wear and tear, lack of maintenance, or owner-caused damage fall outside the guarantee. The protection covers building failures, not ongoing upkeep responsibilities.
Who Provides These Guarantees
Master Builders New Zealand administers the Master Build Guarantee scheme. Only members of Master Builders can offer this guarantee to their clients. Membership requires meeting standards for qualifications, experience, and financial stability.
Certified Builders Association offers a similar guarantee scheme through its members. The coverage is comparable, providing equivalent protection through a different industry body.
Some large building companies offer their own guarantee schemes. These vary in coverage and backing, so understanding what stands behind any guarantee matters.
Builders without industry body membership may offer no guarantee protection at all. This does not mean they are bad builders, but it does mean you carry more risk if something goes wrong.
Making a Claim
If problems arise, the claims process determines whether you receive protection. Understanding this process before you need it helps manage expectations.
Claims begin with notification to the guarantee scheme. You describe the problem, provide evidence, and request assessment. The scheme reviews your claim against the policy terms.
For defects claims, assessment determines whether the issue constitutes a structural defect covered by the policy. Cosmetic issues and maintenance matters fall outside coverage. The scheme may send assessors to inspect the problem.
If your claim is accepted, the scheme arranges remediation. This might involve your original builder, another contractor, or financial compensation for repairs you arrange yourself.
Disputes about claims can be challenging. The scheme makes decisions based on their policy interpretation. If you disagree, you may need to pursue the matter through dispute resolution or legal channels.
Guarantee vs Other Protection
The Building Act provides some protection regardless of guarantees. Councils issue Code Compliance Certificates confirming buildings meet standards. Licensed Building Practitioners are accountable for their work.
However, these protections have limits. Councils do not guarantee the building; they confirm it met standards at inspection. LBPs may lack assets to meet large claims. Guarantees provide additional, specific protection.
Professional indemnity insurance that builders carry provides some protection. However, policies can lapse, and builders can become uninsured. Guarantee schemes provide backup when direct claims against builders fail.
Choosing a Guaranteed Builder
Selecting a builder with guarantee protection is straightforward. Ask whether they are a member of Master Builders or Certified Builders and whether their projects include guarantee coverage.
The cost of guarantees is typically included in your build price. Builders factor guarantee fees into their pricing. You should not pay separately for what should be standard protection.
Compare guarantee coverage between builders if they offer different schemes. While Master Build Guarantee and Certified Builders guarantees are comparable, individual builder-provided guarantees may differ significantly.
Your Peace of Mind
Building a home involves committing substantial money to a project that takes months to complete and must last decades. Guarantee protection provides peace of mind that defects and builder failures will not leave you carrying unmanageable costs.
The guarantee is not a substitute for choosing good builders and monitoring your project carefully. It is a safety net for when things go wrong despite best efforts. Having that safety net in place lets you proceed with confidence.
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