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Housing : June 2009
ADVERTORIAL the state of play for builders The building industry is faced with uncertainty in the current economic climate. David Turner looks at how you can protect your business. How are current economic conditions likely to impact on housing construction? You don’t need to be an economist to recognise that the economy has slowed down since mid last year.With this trend forecast to continue into the near future, we can expect a decline in housing production levels, rising unemployment and an upward pressure on costs. The challenge for builders will be the management of costs, cash flows, outgoings and bad debts In 2009 we have already seen the number of new housing construction projects decline, pushed along by lenders’ reluctance to write loans and an overall slump in demand. This in part has been relieved by continuing support from the federal government. The 2009 Federal Budget extended the First Home Owners’Grant until 30 September after which time those entering the market will be eligible for half the boost until the end of the year. We expect this will help stimulate housing activity and construction. What are the main challenges for HIA member businesses? HIA Insurance Services has identified several key challenges that businesses will face over the next 12 months: • Credit will continue to become more difficult to obtain and borrowers will be far more closely scrutinised. • The challenge for builders will be the management of costs, cash flows, outgoings and bad debts. • The business environment will be less forgiving, disputes, bankruptcies and litigation will undoubtedly increase. • The incidence of theft and malicious damage historically increases as tougher times take their toll on people’s lives. How can I protect my risks? In times like these, many builders are looking at ways to cut costs and insurance usually comes up as a candidate. However, rather than a luxury item to be indulged in when business is good, insurance is never more important than during difficult times. The main types of insurance you should consider are contract works and public liability. Left: David Turner CEO of HIA Insurance Services. HOUSING JUNE 2009 Contract works insurance protects the financial investment you have in any project. Cover is provided for fire, theft, water damage, flood, malicious damage, tools and storm on-site, including profit margins in the event of a loss ensuring there are no surprise shortfalls. Tools and equipment insurance covers your equipment on- and off-site so your most important assets are protected around the clock. Public liability covers you for claims made against you for injuries or property damage caused by your work as a builder.When working out the limit you require, you need to take into account the full replacement value, not just your cost to build. For more information call 1800 633 467 or visit www.hiainsurance.com.au David Turner is CEO of HIA Insurance Services – a joint venture between HIA and Aon Risk Services. H 61 About HIAIS HIA members have access to HIA Insurance Services for professional advice on all aspects of your insurance. HIAIS is Australia’s largest and most experienced residential construction insurance broker. As a broker, we represent the interest of our clients, and we are continually developing insurance solutions that address the real needs and risks of the building industry.