Plumbing defects and insurance claims under ministerial order

Plumbing Defects & Insurance claims…

To all the lawyers, building experts and insurance colleagues…

Maybe not as commonly discussed as DBI claims

BUT

Equally important is the Licensed Plumbers General Insurance Order 2002!

Yes! I appreciate some will remind me - it is for the plumber to claim on this insurance, but it is relevant to understand what plumbers are covered for.

We often see these type of claims for defects and subsequent insurance claims emanate from initially a domestic building claim (section 8 warranties) or even Water Act claims in Victoria.

AND Here’s why - this cover is SO relevant:

• There are so many water leaks and plumbing issues in houses and strata;

• property insurance often has a defect exclusion;

• AND…we see so little material about how plumbing claims are made

Well, here is a snapshot:

Firstly,

• to all the lawyers - DON’T be scared of insurance it doesn’t bite, and understanding it is critical to legal practice
• to all the building experts - DON’T get too helpful on the law and tell your clients a claim is not worth it before getting legal advice!
• AND to all my insurance colleagues - this is not just plaintiff side issue but recoveries as well!

Secondly:

• Plumbers, like Builders, have insurance for defective works…SURPRISE!

Thirdly, that insurance is NOT last resort in Victoria. What I mean is that unlike DBI a plumber does NOT need to be dead, disappeared or insolvent to claim.

Fourth! - just like DBI, there is a Ministerial Order that governs the scope of cover and limits of cover.

Here are some key bits YOU should know:

• Plumbers are required to have insurance to indemnify for liability to pay for the cost of rectifying DEFECTS

*Great you say…UNLESS you are the plumber of course…

• Order 18 HOWEVER puts some limits on that…whilst there is $5m requirement for public liability cover *BTW - I rarely see this type of cover relevant to my claims

*but there is $50,000 for a claim (s) under a compliance certificate.

You may think $50k really is not a lot if there are substantial defects.

However:

• there is a $100k requirement for non-domestic plumbing;
• $50k for EACH compliance certificate for domestic;
• and many would appreciate that one build may have multiple certificates;
• also, this doesn’t mean that is all that you can claim against the plumber (just their insurance limits)

AND

• Order 18 (c) and 19 (c) requires cover for the “reasonable legal costs and expenses associated with the successful enforcement of a claim…”

REASONABLE legal costs are covered too…

There are loads of other limits or requirements of cover and it comes down to what policy is there and whether a claim is made!

AND whether you can prove defects - so expert evidence is always critical.

Contact us if you have any questions

Licensed Plumbers General Insurance Order 2002 (PDF)

This article is a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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