The issue of cladding - compliant or potentially otherwise is causing concern among building owners with some insurers trying to customise clauses and definitions in their policies.
According to the Australian Institute of Building Surveyors (AIBS) and building insurance broker BRIC, when it comes to the issue of cladding, there is the potential for building owners to be left out of pocket because of the wording changes of certain insurance clauses.
A recent letter sent to AIBS members by BRIC noted that "Some clauses exclude claims arising out of 'non-compliant' aluminium composite cladding whereas others exclude "non-compliant" and "non-conforming" cladding or building materials generally.”
BRIC wrote that “The exclusions that we have seen are broadly worded, removing all cover when non-compliant products exist irrespective of whether the insured practitioner caused or contributed to the issue."
BRIC also noted that some insurers are drafting their own definitions of “non-compliant” or “non-conforming” with these definitions being drafted in a very broad fashion thereby broadening the scope of the exclusion.
“Practitioners should be very wary of such clauses and the fact that policies without such clauses are still readily available; therefore, you should not accept a policy with this type of clause,” noted BRIC.
Having said that, the insurance broker says to date it has not had any problems obtaining policies without the proper clauses and in cases where the insurer has refused to remove the clause, BRIC said it placed the policy with an alternative insurer.
BRIC says that “now, more than ever, it is critical that practitioners take steps to ensure they have appropriate professional indemnity insurance.”
As for the AIBS, they have gone on record in a recent senate inquiry over their concerns both with the cladding and safety audits and what that could mean for the industry as a whole and their members in particular.
“The Australian Institute of Building Surveyors is aware of widespread concern among building practitioners that these sections of the National Construction Code (NCC) lack clarity and therefore are open to interpretation by building practitioners and building industry regulators,” it wrote in a recent senate submission.
The ambiguity and confusion around the insurance clauses just adds to the cladding compliance dilemma.