The Certified Builders' Association says there are builders who would rather turn down work fixing leaky homes than run the risk of being sued.
Under a proposed financial assistance package for owners of leaky homes, central government would pick up 25% of the cost, as would local authorities in cases where they sign off the work. The homeowner would be liable for the rest.
Association's chief executive officer Derek Baxter told a parliamentary select committee on Thursday that some builders would rather stay home and go broke than repair leaky homes.
Mr Baxter says that's because they are concerned about being drawn into legal disputes relating to the original work, as it is very expensive to prove they were not responsible.