Shed Manufacturers and Insurance

Posted on : April 11, 2013

The Shed rumor mill is on overdrive at the moment with what is speculated as an inevitable collapse of a big shed player (although a similar rumor has been incorrect before).  Irrespective if this eventuates, it happened a number of times before and will happen again.  The consumer is the last one in line and they lose their money without receiving any goods.  There must be a way to protect the shed buyer in this case.

Should the parent shed companies mandate home warranty insurance as a condition of reselling their product – specifically protecting against liquidation?

This is the only way to protect consumers against liquidation (even though some providers of the insurance only cover 20% in that event).  The problem is that a great number of sheds are not covered as the mandatory home warranty insurance threshold is $20,000.  This is due to the cost of obtaining the insurance, as the shed price is significantly impacted.  The real problem is that the home warranty insurance should have far smaller premiums (as it is very rarely claimed) and the threshold should be revised downwards.

There is a three prong strategy required here.

  • Lobby the insurance companies and work harder and get more competition in this low risk insurance area to significantly reduce the premiums.
  • Lobby the government to reduce the mandatory threshold.
  • Ensure that 100% of the shed buyers outlay is covered in the case of liquidation.
  • Ensure that the mandated insurance does not impact the shed price too much.

The market is tight, and this is when poor process or high risk is punished.



5 Responses to “Shed Manufacturers and Insurance”

  1. Chris said...

    In NSW, when the home warranty insurance was administered by the Builder Services Commission (which was merged with and then disappeared into Fair Trading) it was mandatory to be audited to qualify for the insurance to have your builders license renewed. There was also a category for selling kits only (even a full open builders license could not sell kits unless their license was endorsed to do so). The contract limit for needing a policy was $5,000.00

    When the insurance scheme was privatised mandatory qualification for home warranty insurance was scrapped so a whole under class of licenses were issued with the endorsement “Does not qualify for insurance” and those builders under that license could still complete contracts and do the work providing the individual contract did not exceed the limit. Eventually the limit was raised to $12,000.00 and then recently to $20,000.00. Also, under the progression to national licenses, the category for selling only kits was deleted to bring NSW in line with the other states. This left an awful lot of licensed builders and kit only sellers out there who have never had any financial checks to see if they are viable or know how to run a business of any kind.

    The whole system is developed for the main residential building market, i.e. houses, not sheds, and you can do millions of dollars worth of buildings where the individual contracts are under $20,000.00, particularly if you contract split (even though it is illegal). You can also sell a lot more kits without any financial checks at all and then get a lot of kick backs from the sub trades (again illegal).

    The shed manufacturers will never enforce their agents to have financial indemnity insurance as it would cost them money (and they probably don’t care) and the Steel Shed Group is a farce as it is run by the same manufacturers. It will only be a return to licensing kit sellers and making qualifying for home warranty insurance for all license categories mandatory, and thus ensuring regular financial audits, that you will clean the industry up. Anything else is window dressing.

  2. Shedeye said...

    Hi Chris,

    Brilliant look into the history and it does seem to be in a much worse position today.

    Keep the great information and content coming.


  3. Chris said...

    It should also be noted the reason the kit sales only category was created, the collapse in the 1980’s of McFadden Kit Homes. This organisation had sales staff out taking full payments at the time of order for kit homes the night before they went into liquidation. Lots of pensioners lost their entire savings thinking they were getting the deal of a lifetime on their new home.

    This collapse was also the reason for the maximum 10% deposit for orders under $20,000, 5% for orders over that amount and further progress payments linked to actual work done. Before this it was totally open ended.

    The owner/s of McFadden Homes went on to establish AG&S Sheds which became Fair Dinkum Sheds (now owned by Stramit/Fletchers) and are now the people behind Best Sheds.

  4. Peter said...

    This is a statement from parliment

    *27 MCFADDEN HOLDINGS PTY LTD___Mr Mills asked the Attorney General, Minister for Consumer Affairs and Minister for Arts___
    (1) Did the Department of Business and Consumer Affairs investigate D. & G. McFadden Holdings Pty Ltd of Ross Street, Goulburn, during 1989/90?
    (2) What was the outcome of the investigation?
    (3) Has Mr McFadden been advised of the outcome?
    (4) If not, why not?
    (5) Have any charges been laid?
    (6) If not, why not?


    The kit home and kit garage manufacturer D. & G. McFadden Holdings Pty Ltd collapsed on 13 February 1990 with the appointment of a provisional liquidator and debts in excess of $6 million made up of several million owed to the ANZ Bank and over $3 million owed to consumers who had either fully or partially pre-paid for kits.

    The Department of Consumer Affairs has continued its investigations into the circumstances surrounding the collapse of D. & G. McFadden Holdings Pty Ltd in an effort to establish whether there are any parties, apart from the liquidated company and its directors, whose involvement may leave them liable to consumers or other creditors.
    A report on the results of the investigation has been prepared and is currently being considered by the Department.
    As the investigation report is still under consideration, I am not in a position to make any comment concerning the likely outcome. However, I can assure honourable members that the interests of the affected consumers are the Department’s highest priority.
    Mr McFadden has not been advised of the contents of the report at this stage.

  5. Dan said...

    Look into who owns Stone Homes, a large Kit home company

    Whois response for

    Domain Name
    Last Modified 04-Mar-2012 21:56:19 UTC
    Registrar ID NetRegistry
    Registrar Name NetRegistry
    Status ok
    Registrant STONE HOMES PTY LTD
    Registrant ID ABN 26 115 467 439
    Eligibility Type Company
    Registrant Contact ID STON0404
    Registrant Contact Name Gai McFadden
    Registrant Contact Email
    Tech Contact ID REJA1106
    Tech Contact Name Jacob Reardon
    Tech Contact Email



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