Undertaking construction work can be stressful at the best of times, and almost inevitably not everything will go to plan. In Queensland, the Queensland Building and Construction Commission (QBCC) provides a Statutory Insurance Scheme design to cover defective building work.
However, in a decision that highlights the competing interests of an insurer to be able to properly investigate a loss, and the duty (and desire) of insureds to mitigate their loss, or prevent any ongoing loss, the decision of the Queensland Civil Administrative Tribunal in Perry v Queensland Building and Construction Commission  QCAT 234 serves as a cautionary tale.
Mr Perry, a property owner, made a claim under the QBCC’s Statutory Insurance Scheme following a builder completing defective roofing works to his home. The QBCC agreed the work was defective and directed the builder to rectify the defect. The builder, however, failed to comply with the direction.
Mr Perry, after a protracted period of time where the QBCC did not take any action in relation to the defective works, attempted to rectify the defective works himself, and then sought to seek reimbursement from the QBCC, pursuant to the Scheme, for the costs of that.
While there were several factual issues in dispute, including whether the defective works was covered by the Scheme in the first place, the issue before the QCAT was whether, because the property owner rectified the defective work without approval of the QBCC, that voided the property owner’s entitlement for assistance under the Statutory Scheme.
The short answer is yes: taking steps to rectify the work without prior approval of QBCC did disentitle the property owner to assistance under the Statutory Scheme. The QCAT Member stated that this was because the carrying out of any unapproved work, like rectification work, could impact the assessment of the allegedly defective work and would impact the ability of the QBCC to direct the person who carried out the building work to rectify such work.
While the Statutory Scheme offered by the QBCC is somewhat unique, this matter highlight’s the prejudice an insurer may suffer if an insured takes action and rectifies damage without involvement or knowledge of the insurer. This is particularly so if the insurer may have concerns whether the damage was caused by an insured event, or if there is a right of recovery against a third party in respect of any claim paid out under the policy.
However, this needs to be contrasted with the duty to mitigate loss, and to take steps to prevent further loss, that is found in most policies (or would be implied in any event).
Particularly in situations where, following severe storm events, there can be significant delays in investigating, let alone rectifying, damage, if you have the means to, should you take steps to attend to the damage yourself? Or will that put your policy coverage at risk?
Each policy and each loss is different, but based on the QCAT’s decision, you would be right to think about it twice. But as always, if you are uncertain about how your policy would respond, contact your broker to discuss.