Do I need Insurance Cover when building my Home? What Sort of Cover?

Build Safe

Construction & Public Liability Insurance

One of the most commonly overlooked problems for people building, renovating or extending their home is the issue of insurance.

Why Do I need Construction & Public Liability Insurance?

Owner builders, by taking out the control permit, can be deemed to be in control of site safety and co-coordinating of workers.  Uninvited guests, neighbours or workers could sue you for hundreds of thousands of dollars if an injury or damage can be traced to your negligence.  It is vital that you take out Public Liability Insurance to protect yourself and your assets against potentially huge claims.

Public Liability covers third party personal injury and property damage that occurs during the period of the policy for which the insured shall become legally liable.

Where workers are employed rather than subcontracted the owner builder should seek workers compensation cover.  Public Liability does not satisfy workers compensation requirements.

Note:  You are required to ensure that all subcontractors and specialist suppliers provide you with their own public liability insurance for damages or personal injuries they cause due to their negligence.

What Does Construction Insurance Protect me For?

Construction Insurance (also known as Contract Works, Material Damage or Construction Risk Insurance) covers the main risks encountered during the building process.  These include malicious damage or vandalism, theft, fire damage, storm, wind and water damage.  The Buildsafe Policy includes at no extra charge, an amount to cover demolition, removal of debris and professional fees that may leave you underinsured in the event of a major claim.

What About Extensions & Renovations on My Home which is Already Covered by Home & Contents Insurance?

It is vital that you check the specific Policy wording of your Home & Contents Policy, as most insurers suspend the home insurance and public liability cover for renovation and extension work over a certain value or complexity.

This could affect the cover to the existing house for loss or damage as a direct result of the renovations or extensions.  Public liability cover could also be affected.

If you are renovating or extending you should check your current policy wording carefully.  Buildsafe is able to cover both the existing home and the extensions or renovations under its Construction Risk Policy.

The Underinsuring Trap

Don’t try to save money by insuring your works for less than the actual replacement cost of a licensed builder carrying out the work.

In the event of a indemnifiable event under the policy, (an event that is insured), and it is found that the sums insured are less than 90% of the amount required to be insured, the amount recoverable by you under this policy will be reduced by such proportions as the sums insured bear to 90% of the amount required to be insured.  Eg. Say a home is insured for $60,000 rather than its replacement cost of $120,000 and there is a loss of $40,000.  The insurer will only be required to pay $22,000 due to these provisions.  This would be calculated as 55% of the loss due to the proportion of the $60,000 insured to $108,000 (90% of replacement cost).  In this case the owner builder will need to bear 45% of the claim.

In the event of total loss the owner builder would have to pay $60,000 towards the cost of rectification.

Is the Building Insured Once Completed and Still Vacant?

Very few insurers, including your Buildsafe Policy, provide cover for completed, unoccupied buildings waiting to be sold or settled.  Your Buildsafe Construction Risk Policy can be endorsed for up to 2 months cover on a vacant building subject to a monitored alarm system during construction.

If you are going to need this protection you should consider building in the alarm system during construction.  The endorsement can be arranged once the building is complete and does not have to be nominated from the start.

Is Your Nature Strip Covered?

Yes.   Your Buildsafe policy does cover public liability for your nature strip.

When Is Warranty Insurance Needed?

Homes can not be sold where building works exceeding $12,000 have been completed within the past 6 years, (NSW & Vic Legislation), without warranty insurance to protect the new purchaser.  Owner builders are unable to obtain warranty cover until the building works are satisfactorily completed.

Buildsafe Services Include:

Owner Builder Warranty

Owner Builder Club

Owner Builder Education Courses

Practical Owner & Builder Magazine

Builders Warranty & Construction Insurance

Building Contracts & Specifications for owner builders & licensed builders

© 2008 Wakool Shire Council
This page: http://www.wakool.local-e.nsw.gov.au/faqs/pages/40912.html