How we can help if you’ve got a complaint about a building warranty.
What is building warranty?
Building warranties cover major problems with newly built or converted homes. They work differently to normal home insurance policies. Building warranties are sometimes called building guarantees.
These policies usually last for 10 years. They are split into three main parts, giving you cover for:
- before the building is completed
- years 0 to 2
- years 3 to 10
You normally get a building warranty through a builder after you buy a property.
Types of complaint we see
People typically bring their complaint to us because:
- their builder has failed to complete the build or conversion
- their builder has committed fraud or is insolvent
- there are structural problems with their home
How to complain
Talk to your insurer first so they have the chance to put things right. They have to respond within eight weeks. If they don’t respond, or you’re not happy with their response, let us know.
Bringing a complaint to us is straightforward and won’t cost you anything. We’ll check if your complaint is something we can deal with, and if it is, we’ll investigate.
What we look at
To help us consider a complaint fairly, we’ll ask you to provide some information. We’ll make our decision about what happened using evidence provided by you, the financial business and any relevant third parties. In reaching a decision, we consider:
- the relevant law
- any regulations that applied at the time
- any industry codes of conduct in force at the time
- the terms and conditions of the policy
Complaints at this stage are rare because issues are usually resolved early on. But we do sometimes see complaints made under this part of building warranties.
You’re covered if the builder is insolvent or commits fraud and doesn’t complete the build. Depending on the circumstances, the insurer should either:
- refund your money
- refund some of your money if the building is partially complete – they’ll pay what they think it would cost to finish the building
- arrange for the building to be finished
If your insurer arranges for the building to be finished, you’ll have to pay them any money you stopped paying the original builder. This is because it’s a cost you would have had to pay anyway.
We see complaints about the insurer paying less than what you expected – this could be because the insurer is only required to complete any remaining works to it's own standards, and not your original specification. You’ll also be required to make any payments that were withheld from the original builder.
This part of the warranty means your builder must sort out problems in the first two years after the building is complete.
Most warranties say the insurer will act as a mediator between you and the builder. This means they will help to:
- identify what faults there are in your home
- decide how to fix the faults
- decide when the repairs need to be done by
This is called a ‘resolution’ or ‘conciliation’ service. We can’t look at complaints about the resolution or conciliation service itself. This includes:
- the insurer’s decision not to offer a resolution or conciliation service
- what faults the insurer identifies
- what repairs are needed
- the repair work completion date
We can only look at complaints after the following things have happened:
- the insurer has written a resolution or conciliation report
- the report has told the builder to do something by a deadline
- the builder has failed to complete the works by the deadline or is insolvent or not co-operating
We can’t look at complaints about anything before these things have happened. We’ll look at the time from when the deadline was missed onwards. When we look at your complaint, we’ll take the following things into account:
- when the builder became insolvent or stopped co-operating
- when the insurer should have known the builder was insolvent or not co-operating
- whether you told the insurer about the builder’s insolvency or lack of co-operation
Your insurer will have needed some time to confirm the builder’s position. We’ll take this into account as well.
It’s not always clear when a builder is not co-operating, so we’ll look at this carefully. Sometimes the builder might be slow at communicating or arranging appointments. This doesn’t necessarily mean they’re not co-operating.
If the warranty says the insurer has to step in when the builder misses a deadline, we might still decide it’s better for the builder to do the work. This is because sometimes, the builder might be co-operating but has experienced delays – for example, with deliveries. In cases like this, asking the insurer to take over might cause a longer delay than waiting for the builder.
If we agree the builder is insolvent or not co-operating, we’ll probably ask the insurer to take over. If the insurer has delayed taking over, we might ask them to pay you compensation for the delay.
We sometimes see cases where there’s more than one resolution or conciliation report. This can make it difficult to work out whether the deadline has expired or not. We’ll look at both reports closely to decide what’s fair.
Most of the complaints we see fall into this section of the warranty. You’ll be covered for structural problems where the builder hasn’t complied with technical requirements. This is sometimes called a ‘breach of technical requirements’.
Your insurer will have a set of technical requirements that the builder must follow. You can find these in your policy documents. If you’re with the NHBC, you can also check the technical requirements on the NHBC website.
We’ll look at the technical requirements that were in place when your property was built or converted.
Normally, for your claim to be valid, all of the following must be true:
- your home has a defect
- the builder has breached technical requirements
- the defect has caused damage
If your policy is with the NHBC, the value of the claim must also be more than your policy’s minimum claim value.
We’ll check that these conditions are met. If they’re not, you probably don’t have a valid claim. For example, you don’t have a valid claim if:
- there’s a defect without damage
- there’s damage without a defect
- the cost of fixing the damage or defect doesn’t meet the minimum claim value
We’ll carefully look at the circumstances of the case and the dispute you have with your insurer. For example, the insurer might agree there’s a defect but disagrees that there’s any damage. We’ll look at whether the evidence shows the defect caused any damage.
What ‘defect’ means
A ‘defect’ is usually a breach of technical requirements. We’ll need to look at whether a technical requirement exists for your claim. If it does, we’ll then work out whether the requirement has been breached. If we decide there’s been no breach, you won’t have a valid claim.
What ‘damage’ means
You might complain because you think there’s damage to your property but the insurer says it’s not covered. Your warranty might say the damage has to be ‘major’ or ‘physical’. Usually warranties define what this means. If your policy doesn’t define ‘major damage’ or ‘physical damage’ we’ll look at whether it’s major or physical in the context of a new home.
Major damage often means the property needs extensive repair works, including complete or partial rebuilding. When we look at a complaint, we’ll consider expert evidence to decide whether the damage is major.
When we look at your complaint, we’ll check that the damage was caused by a defect. For example, the render on one side of your house might be damaged, but the same defective render could be on all four sides. The undamaged sides of the house would not be covered. So we might say it’s fair for your insurer to just repair the damaged side.
What ‘minimum claim value’ means
The minimum claim value is written in your policy. For example, NHBC will not pay for any claim where a repair costs less than £1,000. The claim value is ‘index-linked’, which means it changes in line with inflation.
You might complain that you don’t think the insurer has assessed the cost of the repair fairly. We’ll ask the insurer for a breakdown of how they calculated the cost. If you disagree with the insurer about the cost, we’ll look at the difference in costs to decide what’s fair.
Sometimes the insurer carries out or arranges building control or building regulations inspections. If your insurer does this you’ll have extra cover. You’ll be covered for:
- health and safety issues
- contaminated land
Your policy will normally cover immediate danger to your physical health or safety. If you have a complaint about this type of cover, we’ll look at the building regulations and the immediate danger to your health or safety.
Putting things right
If we think your insurer has treated you unfairly or made a mistake, we’ll ask them to put things right. We’d expect them to put you in the position you would have been in if the problem hadn’t happened. How we ask them to do this will depend on the case. For example, we might ask your insurer to:
- deal with a claim they’ve rejected
- take over from the builder if the builder is insolvent
- take over from the builder if the builder is not co-operating
- add interest to any claim you should have been paid
- pay for more work to be done if you’ve complained about repairs
- pay you compensation for any loss or inconvenience you’ve suffered
Read more about how we award compensation
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