Consultation on 'adequate means' requirements

Consultation is under way on the minimum terms and conditions for insurance policies for private organisations seeking registration as building consent authorities.

A consultation paper, Private Building Consent Authority 'Adequate Means' and Civil Liability Insurance Proposals, was released in late July. Submissions close on 21 September 2007.

The paper is the final consultation process in the establishment of the building consent authority accreditation and registration scheme.

To protect consumers, the Building Act 2004 requires private organisations to satisfy the Department that they have adequate means to meet any civil liabilities arising from their building control work. Councils already have the resources to meet civil liabilities.

The extent of insurance cover that would constitute 'adequate means' would be based on the total value of building projects for which the private building consent authority undertook building control functions.

The Department could approve a lesser amount if it was satisfied that the level of risk warranted a reduction. It could also consider the use of a guarantor or bond when assessing whether it was satisfied a private organisation had adequate means.

The insurance requirements would cover scenarios such as a building consent or code compliance certificate being issued for a building that does not comply with the Building Code, a building failure such as a weathertightness failure causing decay, or negligence in the inspection of a building and the issuing of a code compliance certificate. Claims would have to be made within 10 years of the act or omission on which the proceedings were based.

Private organisations wanting to do building control work will only have to be accredited and registered if they want to operate as a stand-alone building consent authority. A council that has been accredited and registered may, however, use an unregistered private organisation, on a contract basis. In this case liability for the private organisation's building control work would rest with the council.

The consultation paper is available on our website or a copy can be obtained by calling the Department's contact centre on 0800 242 243. It includes specific questions for submitters to respond to, as well as an invitation for general comment.