Hundreds of claims lodged as collapsed builder fallout continues

Property owners caught out by the sudden collapse of Victorian homebuilder, Porter Davis, have started to lodge claims as liquidator Grant Thornton says it is working with Queensland and Victorian state-backed insurance schemes to support them through the crisis.

A spokesperson for the Victorian Managed Insurance Authority (VMIA) says more than 1100 queries and over 800 claims have been submitted via its claims portal.

“To date, we understand approximately 1500 Porter Davis Homes projects were underway in Victoria with VMIA domestic building insurance at the time of the liquidation,” the spokesperson told insuranceNEWS.com.au today.

A spokesperson for the Queensland Building and Construction Commission (QBCC) says 43 claims have been received under the state’s home warranty scheme, including 10 for return of deposits and 33 for non-completion claims.

“The QBCC will continue to work with the liquidator of Porter Davis Homes, Grant Thornton Australia, regarding next steps for assisting home owners,” the spokesperson told insuranceNEWS.com.au today.

For homeowners who have signed a fixed price contract for the construction of a home and paid a deposit, but work has not started on site, the QBCC-run Queensland Home Warranty Scheme will refund them their deposit.

“However, any money paid before a building contract is signed cannot be recovered under the Queensland Home Warranty Scheme,” the spokesperson said.

The collapse last week of Porter Davis has affected more than 2000 customers, mostly in Victoria.

Grant Thornton says the builder had over 1500 current homes in progress in Victoria and a further 200 homes in Queensland before it folded. Work on the homes had stopped and in some cases, ceased for months, as the builder did not pay many of its sub-contractors.

There are also 779 signed contracts with customers where building has yet to commence, the liquidator said.

Grant Thornton’s Joint Liquidator Said Jahani says his team is working with QBCC and VMIA to try to find “solutions to customers as quickly as possible”.

He told a customer webinar session yesterday that Grant Thornton is also trying to see if customers whose unfinished homes have been vandalised or damaged can claim through the builder’s insurance policy. Some affected customers have told local media outlets that their unfinished homes were the target of looting.

“Porter Davis Homes does have insurance,” Mr Jahani said. “We will need to investigate whether that insurance would respond to any vandalism or damage to your property.

“As you would probably appreciate, like most insurance policies, there will be limits. There’ll be excesses and so we’ll be investigating whether or not there is an ability for any claims to be made against the insurance policy of Porter Davis.”

For some customers who have paid deposits but are yet to have the permit for construction work to commence, it is likely they won’t be covered and will lose their deposits.

“There are a number of customers who have fallen into that gap between paying a deposit and work not yet starting on their site because they’re awaiting a permit… who may not have insurance cover,” Mr Jahani said.

Builders in Queensland and Victoria are required to acquire domestic building insurance, or home warranty cover, for contract works valued at more than $3300 and $16,000 respectively. The insurance protects homeowners under certain circumstances if things go wrong, including builder insolvency.

The Queensland scheme covers a maximum of $200,000 and if optional additional cover is taken, the cover goes up to $300,000.

Policies issued by VMIA provide cover for up to $300,000. Builders in Victoria are required to purchase a domestic building insurance policy on behalf of the homeowner for all domestic building projects over $16,000 before taking a deposit or any money. This is a requirement under the Domestic Building Insurance Ministerial Order.

Restoration Industry Consultants Architectural Scientist Tim Law, who is based in Melbourne, says there will be a “major stress” on the VMIA as it prepares to process so many insurance claims in one go.

He also urged Porter Davis customers to check their VMIA policies to understand their obligations.

“A major piece of advice is to read the VMIA policy wordings carefully. It is critical,” he said.