But because builders don’t tend to have this kind of insurance, the Government wants to make it mandatory for those building new homes or doing renovations to buy building warranties or insurance for the building work.
This means that if someone bought, say, a five-year-old home, some of the work would be covered by the warranty/insurance.
One of the issues with this is that there are currently only a few warranty/insurance products in the market, including those offered by Master Builders, Certified Builders and Stamford Insurance.
The Government is wary that with few players, and global reinsurers historically treading cautiously around the New Zealand building sector, there is a possibility warranties/insurance may not always be widely available.
So it is proposing to give itself the power to remove the requirement, for up to four years, if these products become unavailable.
While home owners need protection, the Government can’t force the private sector to provide warranties/insurance. The risk of homeowners being left exposed has held previous governments back from changing the liability regime.
However, the Ministry of Business, Innovation and Employment (MBIE) says that since the proposed law change has been announced, it has heard from product providers and underwriters in Australia, London and Paris that may be interested in coming to New Zealand.
“There are positive signs that there is potential increased competition coming in to provide those schemes,” MBIE manager for systems and markets policy, Michael Warren, told Parliament’s transport and infrastructure committee this month, cautioning talks were still high level and anecdotal at this stage.
Neither Warren nor Building and Construction Minister Chris Penk disclosed which companies were expressing interest in New Zealand.
The global reinsurance market is currently deemed to be soft, making it relatively easy for insurers to get cover at a reasonable price.
However, as IAG New Zealand chief executive Phil Gibson explained earlier this month, big claims events could change this.
“Typically, capital continues to come in until there is some global calamity; something big happens, boom, and then it pulls away and the market hardens up and you see prices rise and it’s harder to get cover,” Gibson said.
In 2019, the Insurance Council of New Zealand told MBIE: “Currently, builders’ warranty insurance in New Zealand is sold by just two providers that are backed by one syndicate at Lloyd’s of London. It should not be assumed that Lloyd’s will be able to provide further capacity in the future, or even to maintain the current level of capacity.
“Lloyd’s capacity for this type of long-tail business can vary from year to year and is influenced by claims performance, changes in the global financial markets, and regulatory requirements and legislative changes both here and in the United Kingdom.”
Lloyd’s did in fact exit the market, returning to underwrite an offering by Stamford Insurance.
In September Stamford’s founder Duncan Colebrook echoed the 2019 warnings, telling the Herald that Stamford was selective when it came to the building work it insured.
Colebrook said that if the Government wanted to guarantee consumer protections were in place, it would need to provide these itself.
Currently, around 46% of new builds have warranties or insurance attached.
Master Builders and Certified Builders offer warranties on work done by the builders they certify. Because the bodies aren’t insurers, they aren’t heavily regulated or backed by reinsurers. Rather, their schemes are self-funded.
Penk believed building standards would rise once more builders were pushed to certify with a member organisation or get an insurer to back their work.
Below is a summary of the cover provided by the three main providers, according to an October 2025 MBIE briefing.
Comparison of main building warranty and insurance products available in New Zealand as at October 2025. Table / MBIE Regulatory Impact Statement
Jenée Tibshraeny is the Herald’s Wellington business editor, based in the parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.
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