New South Wales - Illegal Building Works

Claims Chronicles

The Background

Settlement on Steve and Reena Smith’s* three-bedroom house in regional NSW took place in February 2018. The house included a downstairs flat which had, at one point, been a garage.

What happened next?

After settlement, the Smiths were issued with a ‘Change of Use’ Building Notice. It was focused on the garage conversion and a range of related issues including a stairway that was built to connect it to the upper level of the house, and a kitchen and bathroom being installed on the lower level. In May 2018, the Smiths made a claim for illegal building works.

What did we do?

In June 2018, we accepted a claim under our illegal building works coverage for the conversion of a garage into a self-contained flat. Initially, the Smiths hired their own contractors and conducted their own investigations. However, due to difficulties in coordinating the contractors, we stepped in to help manage the project, ensuring compliance with the Building Notices.

We arranged a builder’s quote totalling just over $91,000 and organised a retrospective property valuation. To comply with the Building Notice, the Smiths had to restore the illegal works to their original state – from a flat, back into a garage. In other words, this meant that they would be losing a bedroom.

The retrospective valuation revealed that had the Smiths purchased the property with one less bedroom at the policy’s inception, they would have paid approximately $56,000 less. With this in mind, we offered a settlement of $160,000, the policy maximum, which included the builder’s quote, valuation, and other claim costs. The Smiths accepted, and the claim was finalised.

Payment: $160,000 | Claim Type: Illegal Building Works

*Name has been changed for privacy purposes.