The preference of the HBCF is not to request additional security from licensed building contractors. However, medium to large builders who do not hold sufficient assets within the building entity may give a commitment to secure the building entity by external assets. Where security is required it will be in the form of a director’s or related company Deed of Indemnity.

Securities Held By HBCF

The standard form of security will end in three (3) years from the practical completion of the last job which the security was applicable. The security will only be for the nominated amount required to meet the HBCF equity requirements. For some builders a security may also be required where threre is no demonstrated track record or all assets are held outside the building entity.

Standard Deeds of Indemnity will include a limit of indemnity an exoiry date and a mechanism for a builder to request a review to determine if the Deed of Indemnity is still required. Where an applicant entity is operating as part of a group structure, a Group Trading Agreement signed by each entity in the group may be required to be provided.

Important Notice:

HBCF strongly recommends that persons intending to provide security (including a Deed of Indemnity and/or a Group Trading Agreement) for a builder obtain appropriate legal and financial advice before doing so. The terms of the Deed of Indemnity (or other security) and the implications of providing it should be explained to and fully understood by the persons providing the security. They should also have had an opportunity to examine the financial affairs of the builder. Builders also should obtain appropriate legal and financial advice.

Bank guarantees

Bank Guarantees will not be sought by HBCF as a condition for providing insurance eligibility, though a builder can provide a bank guarantee if they choose to. 

Builders with securities held by other insurers

Securities provided by builders to other insurers are unable to be transferred to HBCF. Builders who were required by the previous insurers to have a security provided may also required to provide a security to HBCF. 
Where a builder considers that their financial position or other circumstances have changed and a security is no longer warranted they can request a review of their eligibility profile. The review may result in the builder being given other options such as increasing the equity in the business or participating in the Building Contract Review Program (BCRP).