#18615

The home owners warranty insurance policy falls within the NSW Home Building Regulation 2004. Clause 58, which relates to limitations on liability and cover, at sub-clause ((1)(k)(ix) specifically provides that the insurance contract may exclude a claim for loss or damage resulting from consequential loss of rent (or other income, loss of enjoyment, loss of business opportunity, inconvenience or distress), but the policy does not contain any such exclusion. The insurance company is liable under the policy to pay for loss for breach of statutory warranties (which has been acknowledged) as the original builder became insolvent and the company wound up. The building is comprised of three stories and is about seven years old.

To solve the water penetration issue to the unit, the remedial builder has determined that the roof to the dining and lounge room area has to be replaced. It is for the remedial builder to determine whether the building work will render the unit uninhabitable. (If considered habitable, then a further question arises as to whether the tenants would remain or abandon the tenancy agreement). It has been acknowledged by the insurer that it will pay for alternative accommodation (assuming that the premises are considered uninhabitable).

No consideration has been given to the rental issue by the EC because it has not yet been determined whether the unit will be uninhabitable during the building work.