Claims Examples | Master Builders Insurance Brokers
Contract Works Insurance
Post construction and defects liability period, a homeowner contacts the builder to advise of water damage being visible, with water marks appearing on ceiling plaster, below an upstairs bathroom.
Through a waterproofing failure, an entire shower area, subfloor, plastering, painting and insulation had to be replaced costing the builder over $40k.
Many contract works & liability policies completely exclude the cost of repairing future damage caused by defects in construction.
Coverage is available, which excludes the cost of the defect (ie the waterproofing) but covers the damage which has occurred as a result of the defect.
Contract Works Insurance
A locked container onsite was broken into, with thieves stealing almost $30k worth of tools.
When cover for tools is selected, and a theft occurs, the actual settlement amounts can vary significantly between insurers. Many policies apply depreciation immediately to tools/plant and equipment, so while you may have paid for $30k worth of tools insurance based upon the replacement value of the tools involved, the end settlement may be well below the cost to replace the stolen items depending on their age. Policies are available that provide 2 years ‘new for old’ insured values for tools, with favourable depreciation figures for items older than 2 years.
Tools theft is by far our most common claim type at MBAIS, and having the wrong policy could cost you $5k-$12k in the settlement amount for a $30k tools theft claim.
Contract Works Insurance
Close to completion of a residential build, the builder was approached by the homeowner to use the garage as storage, for a few weeks prior to practical completion.
Shortly following agreeing to the request, the nearly complete home was broken into and severely vandalised, resulting in a loss of $120k.
Many contract works policies finish ‘at the earlier of’ several triggers to cease cover, one of which is partial occupancy or being put into use. Even allowing a small portion of your build to be ‘put into use’ can cease cover altogether, as some insurers deem that the project is complete at this stage. With builders being contractually responsible to insure their projects until practical completion, having the wrong policy can mean that you’re not covered when your builds are at their most valuable stage, exposing your business to a significant uninsured loss.
Policies are available that are not prejudiced by partial occupancy or being put into use, ceasing cover at practical completion/handover, which typically aligns with your contracts.
Public and Products Liability
Craig is a residential builder who won a contract to carry out the construction of a new home.
During the excavation and site preparation, the neighbouring property owner reported damage to their house. They believed that the cracking in their lounge room wall was as a result of the work Craig was undertaking.
The Insurer found Craig to be negligent by not adequately protecting the neighbouring property. Craig's Public Liability policy covered his legal and defence cost as well as the cost to repair the neighbour's property.
Max is a residential builder who promotes his business as a custom home builder.
The architect and engineer he engages incorrectly design the slab for a sloping block build, resulting in severe structural issues to the home.
When the homeowner pursues recovery of costs, the builder is involved in the lawsuit, incurring over $60k in legal expenses, and a small portion of the damages, which ended up being an additional $45k.
Because Max had a professional indemnity policy, the Insurer covered the total $105k cost incurred, less his excess.
John is a sole trader who has worked subcontracting as a bricklayer for six years.
His fitness level is not what it used to be, and his work involves significant lifting on site. While working for a large and reputable home builder, he fails to lift a heavy load correctly and suffers back pain resulting in time off work.
The home builder notifies their Insurer of John's incident and lodges a Workers' Compensation claim. The claim undergoes investigation and settled by the home builders' insurers.
While the subcontractor is unable to work, the home builder is required to maintain contact with him and take an active interest in getting him back to work. They work with their Insurer to ensure site safety has the highest priority.
Sally is the Director of Martini construction which has 25 members of staff.
A former employee who went through a disciplinary process with the business has lodged a claim for unfair dismissal. Sally is named in the statement of claim as well as Martini Constructions.
Because Martini Constructions has a Management Liability policy, the Employment Practices section will respond to the claim defending both Sally as a Director and Martini Constructions.
David is a carpenter contracted to build a pergola at a residential property in Melbourne.
During the construction, David accidentally drops a cross beam onto the existing paving beneath the pergola. Unfortunately, this results in cracked pavers and the homeowners hold David responsible.
Luckily, David's Tradies insurance includes Public Liability, which covers him for damage to third party property. He was able to lodge a claim with his Insurer, have the paving fixed for the homeowner and complete the pergola contract.
It’s Monday morning and the start of a brand-new week. Frank fires up his computer and reads through the emails he received over the weekend.
He’s excited to see that a package is on his way to him and clicks on the link to find out when the package will arrive. The email was not genuine and opens a crypto locker virus which completely shuts down the company’s computer systems and is followed by ransom demand to reinstate the system.
Frank’s company took out Cyber Insurance even though they never expected this would happen to them.
A valuable feature of Cyber Insurance is the 24/7 helpline, so Frank’s company was able to get immediate help to get their computer systems up and running as soon as possible.
One of Australia’s leading major building companies shockingly went into administration after being unable to secure additional funds from its banks following cost blow-outs on their large-scale projects.
The building company utilised surety bonds for their performance and maintenance guarantees. Once the company was in administration, the beneficiaries of the bonds, principals of the projects they had contracted to, claimed on the surety bonds in place.
Just over $150m was called on in the first week of administration with all bonds paid within two weeks of the building company going into administration.
On the way home from site one afternoon, Michael was driving the company truck loaded up with an excavator.
As he took a sharp corner, he lost control around the bend, and the truck rolled damaging the excavator. Michael was ok; however, both the truck and the excavator sustained damage beyond repair.
Michael was able to claim for both vehicles under his commercial motor policy.
Plant and Equipment Insurance
Brad arrived at work to find that his excavator left securely on-site overnight was no longer there.
He immediately contacted the police and reported it stolen.
As the vehicle was less than twelve months old, Brad was able to claim the agreed value for the machine. He was also able to hire a similar machine at the Insurer's expense and continue to work, so he did not lose any income.
Gavin operates a floor sanding business from a small workshop where he keeps his materials and equipment.
A storm causes water damage to his contents, and he is unable to trade for a period of eight weeks, causing his business to lose money. We had sat down with Gavin and analysed the risks facing his business.
Under Gavin's Business Pack policy, there is cover included for water damage to his contents and Business interruption for lost income.
Gavin's insurers act quickly to replace his contents and make an interim payment on lost income to enable him to pay bills. Gavin's business is back on its feet, and his livelihood is protected.
Mark, a carpenter in his mid-20s, had recently become self-employed and was keen to have his income protected.
Through the process of advice, an amount of Life and Trauma cover were also included in his policy. Two years later, Mark was diagnosed with Testicular Cancer.
Alongside receiving his monthly Income Protection claim payment, a further $50,000 lump sum was paid via his Trauma Cover. Mark has since made a 100% recovery and is fully back on the tools.
Trade Credit Insurance
Richard, the CFO of an air-conditioning services company, wanted to protect their cash flow from the builders who used their services, so they took out Trade Credit Insurance.
Subsequently, one of his builders went into administration and left his company as an unsecured creditor, owing $345,000.
Richard claimed on their Trade Credit policy ensuring that their cashflow was protected and they did not have to borrow to keep the business going.
Industrial Special Risks
David is a modular home builder with four factories located within a 100km radius of each other around Australia.
All of the factories hold high-value physical assets such as materials, machinery and equipment. During a severe hail storm, all locations suffered damage to the roof and consequential water damage to machinery and equipment.
David's business holds an ISR policy and all locations were insured; only one excess was payable because all locations were affected by the same storm.
Along with the damage, David's business was able to claim for increased costs of working. Some operations needed to relocate to continue to operate the business until the claim was paid.
An executive travelled to Perth on business, and his company had a Corporate Travel Insurance Policy cover all employees for travel both local and overseas.
When the employee booked into the hotel, he found his hotel room was not made up and went down to advise the front desk. The hotel offered him another room; however, in the confusion of changing hotel rooms, he left his sunglasses in the previous unmade room.
He called reception, and unfortunately, no sunglasses were found.
The executive then lodged a claim with the Corporate Travel Insurer and was cash paid for his loss of $275.
On her way home from work, Monica has an accident involving another vehicle, which was her fault.
While the other vehicle only sustained minor damage in the collision, her car had some severe damage. Monica called her insurance broker who took the details of the accident, and they contacted her Insurer directly to lodge the claim and arrange a tow to the repairer.
Her vehicle underwent an assessment and approved for repairs by her Insurer. While her car was off the road, Monica had access to a hire car as her policy had a hire car inclusion.
Monica's vehicle gets repaired by her smash repairer of choice, and her Insurer also paid for the minor repairs to the third-party vehicle as she was at fault.
Elaine and Lachlan's family home and contents received bad damaged during a storm.
They had to move out of their home for ten weeks while repairs were undertaken.
Their Home insurance paid for the repairs to the home and the cost of replacing their damaged contents. It also covered the full cost of rental accommodation while the house was undergoing repairs.
MBIB acted quickly to enable Elaine and Lachlan and their two children to carry on with their lives during this difficult time. The service included managing all aspects of the claim with their insurer and loss adjuster.
Jenny was looking forward to her cruise; she had been planning the holiday for over a year.
A week before Jenny was due to board her cruise, she, unfortunately, broke her ankle playing hockey.
Luckily Jenny had taken out a travel insurance policy and was able to recoup the majority of costs she had already outlaid. Jenny was able to book another cruise in a few months once she is all healed.
Mary and Bill owned an investment property on Sydney's Northern Beaches.
They relied on the rental income from their tenants to help cover the mortgage payments. During a particularly bad storm, water entered the premises and flooded the home. There was extensive damage to carpets, wall coverings and skirting boards.
Luckily Mary and Bill had landlords cover which they successfully claimed on for repairs to the property.
The existing tenants were not able to stay in the property while the home was inundated by water. Therefore Mary and Bill also claimed for loss of rent while the house was uninhabitable, allowing them to repair the property quickly and meet their mortgage repayments.
An apprentice builder was working from heights on a construction site when the scaffold rail failed, and he fell and later died in hospital.
It was alleged that the apprentice's Employer failed in their duty of care to provide a safe workplace and could potentially face a fine of $250,000.
The employers Insurer appointed solicitors to represent them, and even though they were found liable, the Insurer helped significantly reduce the fine to $50,000.
While the fine is not covered by insurance, the investigations and defence costs were and amounted to $80,000.
Legal Expenses Insurance
A builder was engaged to construct a new garage with a second storey extension above.
The usual quality standards were in place, and they complete the project on time. However, the final invoice remained unpaid by the due date. Upon chasing payment, the owner refused to pay the final invoice due to alleged poor finishing.
The insured offered to review and undertake any necessary works, however, was informed that the owner wanted no further works performed. Our insured had no option but to notify the owner that legal action would follow to recover the unpaid amount.
The insured was successful in court for recovering damages of $45,000. The policy covered the majority of the $20,000 legal costs.
Directors and Officers Insurance
A worker operating an excavator accidentally dug into an electrical cable and was permanently injured and unable to work again.
It was alleged that his Employer had breached various sections of the Work Health and Safety Act. The Employer strenuously defended the action, and the matter was subsequently discontinued.
They did however incurred defence costs of over $200,000 that were covered by their Directors and Officers Insurance policy.
A project manager, located interstate from head office, recruited additional staff to work on a significant new opportunity.
As work on the tender for the new deal had gone on for some time, management became concerned. After attempts to get answers, the project manager resigned, and it was found that the significant new opportunity did not exist nor did the additional staff.
The company’s claim is for the wages of the fictional staff it was duped into paying.
A builder completes a renovation at a local government office.
A year after the works were finished, an employee working in the office became ill. Upon further investigations, they were found to have developed a respiratory condition as a result of inhaling mould spores growing in the newly constructed office space.
As the builder still held a current pollution liability policy, he was able to make a claim. The Insurer found that the builder failed to prevent water from entering the building and did not install proper ventilation to allow airflow and stop mould from growing.
The Insurer covered the cost associated with the third-party bodily injury, which upon mediation came to $150,000
Business Interruption Insurance
Darren, a cabinet maker rents one of a small group of five factory’s in an industrial estate.
Overnight one of the other tenants has a fire which unfortunately spreads into Darren's business damaging stock and contents. He was unable to work while the building was undergoing repairs and also required some vital tools to be replaced.
With Business Interruption Insurance, Darren can continue to pay his bills. He can even relocate to a temporary location and continue to work to ensure his customers receive their orders on time.
Ben owns and lives in a ten storey apartment complex.
He and the other owners in the complex have a strata management committee that arranges the insurance for the building and common property through a broker.
Last weekend the residents were unable to use the elevator due to a small contained fire that damage the electrical panel.
The repairs were carried out promptly by their strata insurer leaving no one out of pocket for the damage.
Personal Accident and Illness Insurance
Jim was playing some backyard cricket with his kids over the weekend and badly injured himself.
It unfortunately resulted in a trip to the hospital and a torn ACL in his left knee.
He received a weekly benefit of $1,200 per week while he recovered. Jim also received help with a rehabilitation plan so that he could return to work sooner.