2 Sep 2016

Lawyer warns of steel mesh insurance changes

10:15 am on 2 September 2016

The insurance industry could move to avoid the fallout from substandard steel mesh being used in homes, a lawyer has warned homeowners.

A worker spreads ready-mix concrete over steel mesh (file)

A worker spreads ready-mix concrete over steel mesh (file) Photo: 123RF

Legal action targeting makers and suppliers of faulty steel mesh has raised doubts about home insurance for thousands of people.

A class action suit backed by a London law firm is targeting makers and suppliers of faulty steel mesh which international insurers have indicated could compromise homeowners' insurance in New Zealand.

Substandard mesh and flaws in its testing were revealed by RNZ this year.

Insurance Council chief executive Tim Grafton said people with home and contents insurance should not be overly concerned.

He said although policies did not generally cover material faults, they would cover resultant damage.

He said if homeowners were concerned about having substandard steel mesh in their concrete slabs they should contact their insurer.

However, insurance lawyer Andrew Hooker said companies could start putting exclusion clauses into people's policies so any damage from defective steel would not be covered.

"Maybe a better example is probably the problem with methamphetamine manufacture and damage," he said.

"You know, the insurance industries have grappled with that for years and now they're all drafting clauses which limit their exposure for essentially everything methamphetamine.

"So, you know, it's likely that the insurance industry will do that in relation to this problem."

Mr Hooker said insurance policies already did not cover the cost of replacing defective materials.

He said it would take some time for insurers to identify what their legal obligations were.

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