The Master Build 10-Year Guarantee

Building guarantees continue to be a topic of discussion in the market, with a Government report likely later in the year. We strongly support more discussion on this important issue.     

Recapping on 2019 and looking ahead
In April 2019 the Ministry for Business, Innovation and Employment (MBIE) issued a discussion paper on compulsory guarantee and insurance products (GIPs) in New Zealand. We were pleased to see strong support for GIPs but understand this is a complex issue. We expect MBIE to issue a report later this year investigating the different options for improving consumer protection – including the role of compulsory GIPs. We look forward to seeing their recommendations. 

Whatever the outcome of this review, we are pleased the topic is getting more attention. We firmly believe everyone building a new home or undertaking a major renovation should have the protection of a building guarantee. At typically less than one percent of the build costs, it just makes sense. 

How it works 
The Master Build 10-Year Guarantee is the leading product in the market. It is well established and is often asked for by name by homeowners and the leading banks. 

The Master Build 10-year Guarantee is only offered through our Master Builders. That is because we know them, have approved them to be Master Builders and we trust them. To become a Master Builder, our builders must comply with stringent criteria, focused on business capability, and build quality. This is a robust process – we only accept around half of the applicants we receive each year. This gives customers confidence in choosing a Master Builder, knowing they are a quality builder, backed by New Zealand’s leading building association. 

Our Guarantee is different to a standard insurance product. The relationship of an insurer is directly with the homeowner and does not involve the builder. In the case of our Guarantee, the relationship is with both the homeowner and the builder. Under our Guarantee, we provide and manage protection for the homeowner if something goes wrong – service deficiencies, relationship break-down, or where their builder is no longer in business. The Guarantee protects them for 10 years. 

The Guarantee has been developed in New Zealand for New Zealand homes. It is managed by the Master Build Services Board, a subsidiary company of Registered Master Builders. We are committed to good governance practice with a five-person Board, two of whom are independent. While we are not required to, we voluntarily meet the requirements of the Reserve Bank’s financial liquidity requirements for insurance companies. We are independently audited, and our actuary is Melville Jessup Weaver, ensuring we meet best practice requirements. 

Misinformation about guarantees and warranties 
One of the key issues we see is there is often a lack of understanding or misinformation about building guarantees. There is also little understanding about the limited protection covered by the Building Act and Consumer Guarantees Act. Building guarantees and warranties provide much greater protection than both these Acts, and provide cover not included by general house insurance. Under the Building Act and the Consumer Guarantees Act, consumers are not protected for Loss of Deposit and Non-Completion. The other key benefit for consumers is that our Guarantee lasts for 10 years, regardless of whether the builder is in still in business or not. This is a real strength of our product and one that differentiates us – we know of other products in the market can no longer offer this. We recommend homeowners look carefully at these products.
Tried and tested
Our builders can be proud of a guarantee that is proven and has stood the test of time. We have been protecting Kiwis for more than 25 years. 

During those 25 years we have protected New Zealand homeowners in good times and in bad, including in a major building company collapse.

David Kelly