Commercial Defects

Commercial Defects

This policy covers the legal liability for claims made against the builder during the period of insurance for acts, errors and omissions of the builder resulting in structural defects. These policies are written on a 'claims made' basis, which means claims can only be accepted when there is a current policy in force with an insurer.

Commercial Defects Insurance is issued on an annual basis and provides indemnity up to twice the annual turnover of a builder, subject to a maximum of $10,000,000 any one claim, and a minimum of $1,000,000. Under the policy the insured is required to pay the first 2% of the value of the contract or $10,000 whichever is the greater, each and every claim.

Complete cover for any structural defects.

The premium paid is based on the structural work conducted by the builder and this is defined as:

  1. all internal and/or external load bearing structures essential to the stability or strength of the building or any part thereof, including, but not limited to foundations, floors, walls, roofs, columns and beans; and
  2. all other works forming part of the external walls and roofing, but excluding weatherproofing works not designed to add strength or support to the building, moveable elements of external windows, doors and skylights.


Likewise a structural defect is defined as any defect in the structural works which affects the stability or strength of the building or any part thereof and is attributable to defective design, defective or faulty workmanship and/or defective materials and which:

  1. results in a regulatory authority closing or prohibiting the use of the building or any part thereof; or
  2. does or would prevent the continued practical use of the building or any part thereof; or
  3. results in destruction of the building or physical damage to the building or any part thereof; or
  4. results in threat of imminent collapse that may reasonably be considered to cause destruction of the building or physical damage to the building or any part thereof.

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