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Insurances for owner-builders

Home warranty insurance --  Insurance Against Defective Building Work

Home Warranty insurance provides compensation for the end owner if a licensed builder or Owner Builder carries out defective building work and/or if the contractor is unable to finish the work. In some states this is known as Home Owners Warranty Insurance. Its parameters and statute of limitations varies from state to state. You should inquire at your Local Council or your State’s Department Of Fair Trading or Consumer Protection for further information.

 

Builders or Tradespeople who contract directly with an Owner Builder to do residential building work must provide home warranty insurance from one of the approved insurance providers. Insurance is required where the cost of that work exceeds $12,000.

When an Owner Builder decides to sell their home within 6 years after completing the work, the owner-builder will need to take out home warranty insurance where the market value of the whole project (labour and materials) was more than $12,000. 

The sale contract must:

include a note that an owner-builder permit was issued in relation to the work; and

that the work done under the permit required home warranty insurance, and

have the home warranty insurance certificate attached.

For information about where to obtain home warranty insurance, go to the approved insurers page.

The insurance providers may require documentation in order to assess eligibility for home warranty insurance on your owner-builder work such as:

copy of the owner-builder permit,

copy of the building application or development approval from council, or a completion certificate,

copy of all mandatory inspections, copy of electrical plumbing certificates,

copy of the land title, and

building inspection report.

 

Workers compensation insurance

Owner Builders are considered to be licensed builders and as such should take out a workers compensation insurance policy to make sure they are fully covered in respect of persons they engage to work for them. Any contractors engaged by an owner-builder may be deemed to be a worker of that owner-builder. Generally, people carrying on their own business, or tradespeople, such as plumbers, electricians and builders, have their own insurance. To be sure that you are protected always check that any licensed contractor you hire has their own workers compensation policy.  It is not enough to ask a builder or tradesperson if they have particular types of insurance. You should ask to see the insurance certificates before you sign the contract.

Workers compensation policies may be obtained from the following insurers:

Construction risk or builders all risk insurance

This covers you the Owner Builder for loss or damage to your materials and work. It's important this insurance is in place for your protection.  If you don't have it, you may risk incovenience, time delays and disputes if materials are damaged or stolen. Cost of sheds, tools, equipment and removal of debris should also be taken into account when obtaining this policy. Contractors engaged by you should also have this type of insurance for themselves.

 

Public Liability Insurance

If you intend to be an Owner Builder or to contract out any type of building or trade work (for which you remain responsible for coordinating) to either a building company, partnership or individual contractor, it is strongly recommended that you take out a public liability insurance policy. This covers you if a family member or member of the public is injured as a result of the building work. You could be liable because you own the property.

Many people are under the misapprehension that because a contractor has their own Workcover or personal injury insurance, the Owner Builder is automatically covered in case of an accident. 

There are many different types of public liability insurance available. For example, some insurance companies allow you to add a public liability clause to your existing house insurance policy to cover any person who has consent to be on your property. You may already have some public liability cover, which may need to be extended for the new risks during the period of construction.

 

 


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