Builder Eligibility Assessment

The assessment process
With Residential Construction Warranty insurance, the underwriter effectively guarantees that the builder will complete the work and remedy any defects after completion (refer relevant state legislation). This is why we carefully assess the risk before accepting the builder for eligibility.

The assessment takes account of financial performance, level of growth, net tangible worth, experience, individuals involved and any adverse information. Key financial factors include:

Gross profit margin
Debtor collection days
Creditor payment days
Turnover growth
Changes to work in progress
Builder size and areas of construction activity
Length of time in industry
Adverse commercial and claims information
Frequency of financial reporting
Job costing system.

If the builder has minimal capital invested in the business we may require additional security.

For more information please see the Checklist of application requirements.

Once approved, the builder receives a Certificate of Eligibility which can be provided to builder licensing and registration bodies. The certificate sets out the builder’s profile parameters:

Total value of turnover approved (any increase requires a subsequent assessment)
Maximum single-contract amount for various types of work
Approved type(s) of construction.

Individual projects
Following eligibility, each construction project requiring insurance must be declared individually and have a Project application form submitted and premium paid through a broker. We then issue a copy of the insurance certificate to the builder, permit authority, broker and home owner.

Ongoing assessment
Builders who have gained Eligibility through our Express Assess will only be reassessed on a biannual basis.

Builders with Eligibility through our Experience Builder Application and whose approved turnover is under $10m will be asked for review information on a random basis, unless previously advised.

Builders with an Annual turnover greater than $10m are required to undertake reviews on a quarterly basis.

Please note there are some circumstances when the above does not apply:

Signs of distress
Excessive turnover growth
Dishonoured cheques
Adverse information
Work outside profile

To help the builder, we will keep an eye on their progress. This should mean enough time is given to enable them to gather the information required for reassessment, and ensure continuity of cover.