Frequently Asked Questions
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BUILDERS GUARANTEE
From 30th June 2022 the administration of existing 10 Year Builders Guarantees is being transferred to a new company.
Nothing else is changing and Guarantees continue to be underwritten for their full term by Southern Pacific Insurance Corporation (SOPAC).
Should you need to make a claim, apply to transfer your Guarantee or for any other enquiry please contact:
Guarantee Management Limited
This change is being made because Guarantee Management specialise in the administration of insurance and related products that have been discontinued but still have a legacy customer base.
For answers to frequently asked questions please visit: www.guaranteemanagement.co.nz/faq
Who PROVIDES your GUARANTEE?
Builtin's 10 Year Builders Guarantee is independently provided by Southern Pacific Insurance Corporation (SOPAC).
SOPAC is an American corporation that specialises in all forms of surety risks, bonds and performance related guarantees. Established in 2007 they operate around the Pacific and internationally through a network of licensed agents, of which Builtin is their first in New Zealand*. In addition to supporting construction projects across the Pacific SOPAC are an approved bond provider for the US Government. Visit the SOPAC website
How Strong Are They?
As at 31st December 2019 SOPAC had net assets in excess of NZD275,000,000. As a prudent surety SOPAC retains Pinnacle Actuarial Resources to conduct an annual review of their potential claims exposure. Called IBNR (Incurred But Not Reported) this figure enables insurers & surety providers to reserve the right amount of capital to pay claims when they arise. Based on their 2018 audit SOPAC has one of the highest liquidity ratios in the industry. As SOPAC's share of the market here grows so too will their IBNR reserves.
Are SOPAC a Licensed Insurer in New Zealand?
No. SOPAC are a US regulated corporation, represented in New Zealand by Builtin*. They provide bonds, third party guarantees and other forms of financial surety that are not deemed to be insurance and providers of which are not required to be licensed insurers under New Zealand legislation.
How Are They Regulated?
SOPAC operate under US legal jurisdiction. They are registered under the US National Association of Insurance Commissioners (NAIC). This is the regulatory body that sets standards, establishes best practices, and conducts oversight of the US insurance industry. Their registration number is 15659. Visit the NAIC website
What is their Claim Reputation Like?
SOPAC is proud of its claims reputation, highlighting a recent payout of over NZD4m on a US Army base project in California. Globally, SOPAC retain construction consultants Currie & Brown to provide prompt, impartial claim assessment services.
In New Zealand SOPAC have delegated a high level of claim settlement authority to Builtin. We use highly experienced local assessors to ensure the claims experience for our customers is prompt, professional and impartial.
Does New Zealand Law Govern The Guarantee?
Yes. New Zealand law governs this Guarantee and the New Zealand Courts have jurisdiction to hear disputes.
*Please note that Builtin New Zealand Limited is acting for the surety, Southern Pacific Insurance Corporation, pursuant to the terms of a Binding Authority and is not an insurer. Accordingly, Builtin shall not be liable for any loss or claim whatsoever.
IS THE BUILDERS GUARANTEE AN INSURANCE PRODUCT?
No, it is not. Put simply a guarantee or warranty means that if a particular event happens, the guarantor will do something if the guaranteed party can’t or won’t. Insurance means that in the event of a particular insured event happening, the insurer will pay. A simple comparison may help explain the difference:
| INSURANCE | GUARANTEE |
| 2 Party Contract (Builder or Owner and Insurer) |
3 Party Contract (Builder, Owner & Surety Provider) |
| Duty of Utmost Good Faith | Disclosure: as in ordinary contract law |
| Cancellable (generally) | Non-cancellable (generally) |
| Calculates premium based on losses | No loss anticipated, fee for service |
| Involves transfer of risk to insurer | No transfer of risk |
| No reimbursement from insured | Responsible party reimburses the surety provider for losses |
Because a guarantee is not insurance it does not need to be provided by a licensed insurer.
Are you a member of a dispute resolution service?
Yes, as registered financial advisers Builtin is a member of The Insurance & Savings Ombudsman Scheme at PO Box 10-845, Wellington 6143. If you have problem, concern or complaint about our service please contact us in the first instance.
If we cannot agree on how to fix the issue, or if you decide not to use the internal complaints scheme, you can contact The Insurance & Savings Ombudsman. This service will cost you nothing, and will help us resolve any disagreements. Their phone number is: 0800 888 202.
How is a builders guarantee different from my legal rights under consumer protection law?
The Building Act and Consumer Guarantees Act provide homeowners with legal rights when it comes to the products and services they buy. They mean that your builder is responsible for ensuring their work is fit for purpose and they must fix defects they are responsible for for up to 10 years.
However, if your builder is no longer trading and can’t complete the work or return to fix defects then this legal protection is of no value at all. That’s where a Guarantee like ours adds real value and peace of mind.
How much will a 10 Year Builders Guarantee cost?
Builtin's 10 Year Guarantee is very reasonably priced considering it covers homeowners for 10 years. The fee depends on the value of the building contract, typically between $700 to $2,500 and the average is around $1,500.
Table of Guarantee Fees (incl GST), as at 18th March 2020*
| Contract Value (incl GST) | Fee (New Homes) | Fee (Alterations/Additions) |
| $0 to $50,000 | $700.00 | $700.00 |
| $50,001 to $100,000 | $800.00 | $800.00 |
| $100,001 to $150,000 | $900.00 | $900.00 |
| $150,001 to $200,000 | $1,000.00 | $1,000.00 |
| $200,001 to $250,000 | $1,150.00 | $1,150.00 |
| $250,001 to $300,000 | $1,250.00 | $1,250.00 |
| $300,001 to $350,000 | $1,350.00 | $1,350.00 |
| $350,001 to $400,000 | $1,500.00 | $1,500.00 |
| $400,001 to $500,000 | $1,650.00 | $1,650.00 |
| $500,001 to $600,000 | $1,750.00 | $1,750.00 |
| $600,001 to $750,000 | $1,900.00 | Price on Application |
| $750,001 to $1,000,000 | $2,100.00 | Price on Application |
| $1,000,001 to $1,500,000 | $2,300.00 | Price on Application |
| $1,500,001 to $2,000,000 | $2,600.00 | Price on Application |
| $2,000,001 to $2,500,000 | $2,800.00 | Price on Application |
| $2,500,001 and above | Price on Application | Price on Application |
*Certain projects may need to be individually underwritten and may incur a fee different than those shown above. Some builders have specially agreed fees separate to the above. Builders may also add a margin to the standard fee, you should check with your own builder to confirm the correct fee.
Where can I see a copy of the full guarantee wording?
You can download and view the current wording here: BBG - Wording v04-05.2020 - Specimen. Please note that your individual Guarantee will consist of this wording, your Certificate of Guarantee and the information provided in your Guarantee Application.
When should I apply for a Guarantee?
A Guarantee application should be made as soon as a deposit is paid, and if there is no deposit, before work commences. You must ask your builder to apply for the Guarantee on your behalf. Generally the application form is completed and signed by both parties at the same time you sign the building contract.
Who completes the Guarantee application form?
The builder is generally responsible for completing the application form. However, we require it to be signed by both the builder and the homeowner. Ask your builder to contact us for a copy of the application form.
What if I don’t have A Building Consent?
It’s not a problem if you don’t have the Building Consent at the time of lodging the Guarantee application. Just note when you expect to obtain it on the form.
How long will it take to receive confirmation that my Guarantee application has been received?
We'll assess the application within 10 working days from receipt of a properly completed and signed application.
How do I know my Guarantee application has been accepted?
When the Guarantee has been accepted we issue a Guarantee Certificate to both builder and homeowner, along with a copy of the terms & conditions. If you have not received yours please contact us.
When does cover start under the Guarantee?
Loss of deposit and non-completion cover starts from the date the underwriter accepts the application. So, it is important to ensure your Guarantee application is made as early as possible, ideally when you sign the building contract and before any deposit is paid.
Cover for defects begins from practical completion or achieving code compliance, whichever is earlier.
Can I transfer the Guarantee when I sell the house?
Yes. A transfer application should be completed once a sale & purchase agreement is completed. Applications for transfer should be made within 60 days of the settlement date. A fee is payable. Please contact us to request a transfer application form.
Should I have a written contract?
The Building Act requires a written contract to be in place for all residential building work over $30,000 incl GST, and there are minimum terms and default provisions that must be included.
For projects worth less than $30,000 you are not legally required to have a written contract, but it is strongly advised that you do. An oral contract may still be legally binding, but will be much more difficult to enforce if there is a problem. It is also unlikely to cover many of the simple protections (for both parties) that a typical written building contract will include.