Taxpayers shouldn't have to continue footing the bill for bankrupt builders, and home owners shouldn't have to spend thousands of dollars in unnecessary court disputes because insurance companies have stepped out of compulsory indemnity insurance in SA, says the Association of Building Consultants.
Association spokesperson Mr Chris Short, said the organisation had made a formal submission in response to the State Government's Home Building Protection Review and believed that enhanced consumer protection measures were urgently needed in South Australia.
"While insurance against the death, disappearance or insolvency of a builder currently offers some peace of mind to consumers, what isn't recognised is where a builder may be too ill to complete a project or is found by a Court that they are not capable of completing the works," Mr Short said.
"The maximum current payout limit of $80,000 is insufficient and should be lifted to at least $200,000 to reflect the increase in building contract prices," he said.
Mr Short said another significant shortcoming was no requirement for an Owner-Builder to have indemnity insurance, which means there are no protection measures in place for defects found once an owner-built property is sold.
"An Owner-Builder should have insurance or be held personally liable - and the lack of insurance protection for building work done to a home should be disclosed to a purchaser as part of a sale process," Mr Short said.
"What has complicated this issue further is the popularity of DIY television shows, which provide little or no information to untrained renovators about the liability if something goes wrong with the work when it is owned by another consumer in the future," he said.
"DIY renovators aren't required to have any particular skills, experience, licences or indemnity insurance - which is completely out of step with the legal requirements for builders, who do the same work, but for a living."
Mr Short said the State Government's current involvement in indemnity insurance should be handed back to the private sector, which would see taxpayers no longer having to guarantee to complete a house when a builder becomes insolvent.
"Private insurers are likely to provide a market-driven, more efficient mechanism and the potential conflict of government in providing regulation and insurance is avoided by the outsourcing the insurance," Mr Short said.
Other recommendations made by the Association of Building Consultants include:
* Issuing of Certificates of Compliance should be extended beyond electrical, gas and plumbing to other trade contractors.
* The licensing of building consultants to stop inexperienced and ill equipped people operating as a building consultant.