16 Oct Uninsured Regulated Plumbing?
The Pandora’s Box of Performance Solutions
Everyone expects their plumber to be fully insured. In Victoria, it is a legal requirement under the Building Act 1993 for all plumbers to carry comprehensive insurance including for defective work and liabilities arising from their work. In all other states and territories though, it is not even compulsory to have liability cover, although all reputable plumbers would carry at least the latter.
The problem is that even in a highly regulated state like Victoria, insurance may not cover everything and unfortunately many plumbers are also unaware of the substantial risks they are taking for themselves and their clients, and this is particularly so when it comes to what is known as a Performance Solution.
WHAT ARE PERFORMANCE SOLUTIONS?
Performance Solutions are more unusual or complex plumbing solutions designed by a qualified expert, and which must also meet at least the minimum performance requirements of the mandatory Australian Standards and Regulations. For example, on a cutting edge, unusually designed building, it may just not be possible to meet certain “Deemed to Satisfy” standards for the roof drainage, say by installing normal eaves gutters, so another way of dealing with it must be developed instead; enter the plumbing Performance Solution.
Performance Solutions are complex and must be prepared according to the extensive requirements of the Australian Building Codes Board (ABCB); those requirements can be found here:
A properly prepared plumbing Performance Solution designed by a genuine expert such as a hydraulic engineer with membership of and training by the AHSCA (the Association of Hydraulic Services Consultants Australia) is the answer to many complex plumbing problems which may otherwise be unsolvable. These solutions can be relied on with great confidence and will ‘perform’ as required because they have been prepared by highly qualified and skilled professionals.
Most unfortunately, in the back blocks of plumbing, there are also those who are prepared to deliberately misuse or abuse the Performance Solution process as some sort of a magic wand to retrospectively permit unforgivable defects in plumbing work. This is not unlike using a bandaid on an amputated leg, then telling the victim that they will be fine in a few days while you just run away.
To service this sort of situation, you firstly need demand from plumbers who have been caught out doing defective work and are, for a range of reasons varying from dented pride to sheer pig headedness, not prepared to ‘cop’ the cost of fixing it properly. They also then need the services of so called ‘experts’ (who are in reality merely “Clayton’s Experts”) prepared to provide the necessary paperwork and to wave the appropriate ‘magic wand’, which amazingly enough forgives most if not all of the defects based on precious little other than the ‘opinion’ of the supposed expert, wrapped up in a totally inadequate but still potentially impressive looking Performance Solution document. Basically, this type of Performance Solution is a complete snow job specifically designed from the outset to cost the plumber as little money as possible, simply because it is based entirely on an inadequately qualified Clayton’s Expert miraculously concluding that ‘I reckon she’ll be right’.
No matter how impressive everything might look of course, the elephant in the room in all of these situations is the question of insurance on any Performance Solution design and also insurance on its actual implementation and certification by the plumber.
THE INSURANCE PROBLEM LAID BARE
Remembering that the Victorian plumbing insurance situation is ‘as good as it gets’ anywhere in Australia, it is extremely worrying to consider that the standard, government mandated insurance carried by all plumbers in Victoria does not even mention, yet alone anticipate anything like plumbing Performance Solutions. There is certainly no reference to them in any of the key guidance documents including the Building Act 1993, the Licenced Plumbers General Insurance Order 2002, nor in any of the individual PDS (Product Disclosure Statements) issued by any of the insurers underwriting this specialist line of business for plumbers.
In other states and territories outside Victoria, standard liability insurance policies sold by insurers also would not routinely anticipate or even mention such a specialist area of work as Performance Solutions in a licenced trade such as plumbing. That’s because this sort of work should by rights and common sense, fall into the domain of higher-level experts than plumbers. Normally those higher level experts also hold their own Professional Indemnity insurance, usually also mandated by strict laws in their state or territory of operation.
Insurance companies are certainly not generally known for paying out on things which are not covered under their policies of insurance. They will only pay for things which are specifically covered under their policy; what is covered is clearly set out in the PDS.
Seeing as Performance Solution plumbing work is not even mentioned or even suggested as being covered by any of these insurers, we believe there is almost zero chance that an insurer would ever respond to a claim arising from a Performance Solution designed or implemented by a plumber holding a ‘standard’ insurance policy, other than telling the hapless plumber and any claimant that ‘regrettably we are unable to assist you in this circumstance’.
The dangers for the consumer of having Performance Solution work done which turns out to be uninsured are therefore obvious, not just in Victoria but Australia wide. Those dangers are further magnified many times if anybody from the shadowlands of plumbing is also rolled out to devise the supposed Performance Solution to ‘fix’ the problem.
Plumbers should certainly also recognize those dangers themselves given that if their insurance does not protect them as they might expect, they will be held personally liable for any claim which arises; this could mean the end of their business and even loss of their personal assets. The Victorian Building Authority (VBA) recognizes this and specifically refers to it in their own guide to Performance Solutions, which can be found here:
In fact the VBA also warns in the same document that no matter how qualified the expert may have been who drew the Performance Solution, the VBA will still blame the plumber for any defects on the basis that ultimately the plumber is the only party authorized to certify the work as compliant.
It is also extremely concerning to consider that despite the comprehensive requirements of the ABCB as to how to prepare Performance Solutions, there are so far as we are aware, absolutely no requirements (minimum or otherwise) set by any state, territory or federal body as to:
- The qualifications of any expert preparing a plumbing Performance Solution, so as to ensure that only appropriate experts are doing this work to begin with
- Training of that person in the specific area in question e.g roof plumbing; this is also required to ensure genuine expertise is used.
- Any insurance the plumber and expert must hold, any limits and what it covers; in fact there are no legal requirements for there to be any insurance at all
- Who must be protected by the insurance (if it even exists)
- How any insurance can be accessed in the event of a claim
The ABCB documentation also does not address in any way, whether or not plumbers themselves are allowed to prepare Performance Solutions; many plumbers however think they can both prepare the Performance Solution and also Certify the work, despite nearly all of what is required in the ABCB guidelines being completely beyond the skills and training of most plumbers.
QUESTIONS TO ASK
If your plumber ever suggests that a Performance Solution is a way forward on your project, extreme care should be observed to ensure your interests are fully protected, but particularly if something goes wrong, either during the project or afterwards.
Also be very aware that there are supposed ‘experts’ out there providing Performance Solutions which do not remotely meet the requirements of the ABCB and who could be trying to sell you down the river where there is also no means of recourse.
We recommend well before any work is agreed, yet alone even starts that so far as the PLUMBER is concerned (assuming he/she is NOT going to be designing the actual Performance Solution), that you address these issues:
- The plumber be asked to provide documentary evidence that he/she holds either a separate policy of insurance covering them for Performance Solution design and installation work, or else that they have what is known as an endorsement attached to an existing liability policy to achieve the same thing. In many cases however, the insurance would take the form of stand-alone Professional Indemnity insurance rather than an add on to an existing policy.
- NB: The insurance must also specify the plumber personally by name; it is not sufficient for it to only mention a company (for example).
- The plumber must also comprehensively prove beyond doubt that the Performance Solution fully meets all of the requirements of the ABCB (see previous link). A fully prepared Performance Solution is an comprehensive document and normally will also be quite expensive.
- The level of insurance protection available for the plumber implementing the Performance Solution must in addition at least equal whatever the legal requirement is in the state or territory where the work is being done. In Victoria for example, that would mean that the insurance on any Performance Solution installation should at least meet the minimum consumer protection requirements of the Licenced Plumbers General Insurance Order 2002.
If the plumber also tries to develop their own Performance Solution, rather than involving an independent expert, even more extreme care should be exercised given that most plumbers are inadequately qualified and equipped to devise Performance Solutions.
If the plumber is however only carrying out the Performance Solution installation work to the design of another expert, additional questions beyond those above must also be asked of the expert actually preparing the Performance Solution design. At a minimum, the matters you need to raise are these, and any reputable expert would have no trouble answering them:
- What the persons qualifications are as an expert (bearing in mind that the designer of a plumbing Performance Solution should really be a qualified hydraulic engineer for example).
- If they are fully-fledged members of any recognized and directly related professional association
- If they are required to be registered or licenced by law in their state or territory of operation to provide their professional services, and if so have them provide proof of their status; e.g all engineers are required to be licenced and will have registration numbers
- The level of their experience in designing Performance Solutions for the required type of plumbing work. You should insist on appropriate expertise, so an expert on drains is not necessarily the person you want to design a complex roofing Performance Solution.
- The expert should also provide documentary proof of Professional Indemnity Insurance in effect at all relevant times, also specifically noting coverage for Performance Solution design work.
- Also ask whether you as the property owner are directly protected by the experts insurance in the event of any errors or omissions by them in the Performance Solution, and if so specifically how you are protected, especially given that you are not engaging the expert yourself (but the plumber or someone else is, such as the builder).
Should the answers to any of these questions be unsatisfactory or else avoided entirely (as also occurs far too often in our experience), you should not proceed with the Performance Solution at all. If in doubt, seek independent expert advice. Metropolis Solutions have Forensic Plumbing and Chartered Loss Adjusting (insurance) expertise available to provide consultancy advice where any concerns regarding Performance Solutions have arisen.
All expert consultants preparing Performance Solution documentation need to be well trained, appropriately qualified and fully insured. Given the presence of some very lowly qualified parties in the shadowlands of plumbing, combined with no current or proposed prohibition on their services being used, nor any current or proposed requirement for them to even have mandatory insurance cover, in some circumstances the Performance Solutions process is also open to potential misuse and can cause very serious detriment to the property owner.
Even though they might think otherwise and tell the customer so with all sincerity, most plumbers are almost certainly not insured for Performance Solution work under their standard policies of insurance. Plumbers in states or territories outside of Victoria may also have no insurance on anything, yet alone on Performance Solution work.
Both the person designing the Performance Solution and the plumber installing it must not only be appropriately qualified, but also carry appropriate insurance for this complex work, so do not be afraid to ask the difficult questions before you agree to anything.
All reputable plumbers and consultants will readily be able to provide the documentation you need to satisfy any queries, whereas anybody who avoids these issues or won’t produce documentation should be treated with the greatest suspicion.