Are Building Guarantees Worth It? What You Need to Know Before You Build

April 7, 2025

When building a new home, you’re making one of the biggest investments of your life—so it’s natural to want protection in place if anything goes wrong.

That’s where building guarantees come in.

In this article, we’ll explain what a building guarantee is, how it protects you, and whether it’s really worth it. We’ll also outline how a typical guarantee works, using the Master Build Guarantee as a real-world example.

What Is a Building Guarantee?

A building guarantee is an independent insurance-backed warranty that covers you for certain issues during construction and after your home is completed.

It’s separate from your contract with the builder and is designed to give you peace of mind if:

  • The builder goes out of business
  • There are major structural or workmanship defects
  • The builder fails to complete the job or fix faults

It typically covers a range of scenarios, depending on the provider and guarantee type.

What Does a Building Guarantee Cover?

Guarantees vary, but most offer protection across:

  • Loss of deposit: If your builder collapses after you’ve paid but before work starts
  • Non-completion: If the builder can’t finish the job, the guarantee may cover the extra cost to complete
  • Defects and poor workmanship: Issues like leaking roofs, structural faults, or subpar finishes
  • Structural warranties: Long-term protection against major building issues

In New Zealand, most reputable guarantees offer cover for up to 10 years.

Are Building Guarantees Mandatory in NZ?

No, but they’re highly recommended.

While some banks or lenders may require a guarantee as part of their lending conditions, they are not compulsory by law. That said, having a guarantee in place gives you a level of protection that your building contract alone cannot provide.

It’s especially important in an uncertain economic environment or when working with smaller or newer building companies.

What to Look for in a Building Guarantee

When comparing guarantees, here are a few key things to check:

  • Is the guarantee independently backed?
  • What is the total coverage period?
  • What’s included (and excluded)?
  • When does cover begin and end?
  • Can you transfer the guarantee if you sell the home?

The more transparent the terms, the more confident you can be in your protection.

Example: How the Master Build Guarantee Works

Many builders in New Zealand, including Today Homes, use the Master Build 10-Year Guarantee—one of the most widely recognised guarantees in the industry.

Here’s how it works:

  • Cover starts from the time you pay your deposit
  • You’re protected throughout the construction period
  • The guarantee continues for 10 years after your Code Compliance Certificate (CCC) is issued
  • Cover includes loss of deposit, non-completion, defects, structural issues, and more
  • It is backed by the Registered Master Builders Association

This gives homeowners peace of mind that they’re not just relying on the builder—but have an independent third party ready to step in if needed.

Final Thoughts: Is a Building Guarantee Worth It?

Yes. A building guarantee offers protection and peace of mind that goes beyond the terms of your contract.

If something goes wrong—during the build or years down the track—you want to know you’re covered. While no one plans for problems, a guarantee ensures you’re not left dealing with the cost and stress alone.

Before signing with any builder, make sure they offer a recognised, independent building guarantee—and take the time to understand what’s included.