We have been using Don Hutton Insurance Brokers, now known as The Builders Insurance Broker for all our Building Construction, Home Warranty and Strata ...
Owner Builder Warranty Insurance is a compulsory insurance required by the Home Building Act 1989. The policy is for benefit of the purchaser and does not provide any cover to the Owner Builder.
The legislation applies to any residential building work undertaken by an Owner Builder, over $12,000 in value, where an Owner Builder permit was issued. This insurance only applies where the Owner Builder work is to be sold within 6 years of completion and is not required if the Owner Builder does not sell the property within this period.
Please note if the work was completed and an occupation / final inspection certificate was not issued immediately for any reason, the legislation deems the date of completion to be the date on the occupation / final inspection certificate.
What does the Insurance Cover?
The insurer will indemnify the insured against the risk of being unable, because of the insolvency, death or disappearance of the owner builder:
A.
to recover compensation from the owner builder for loss arising from a Prescribed Cause.
B.
to have the owner builder rectify the breach or breaches specified in the Prescribed Cause.
Where the Prescribed Cause occurs during the period of insurance.
The policy extends to the costs of alternative accommodation and removal and storage costs that are
reasonably and necessarily incurred subsequent to and as a result of any prescribed cause.
Prescribed Cause means a breach of any of the warranties implied by Sections 18B, 18C and 18D of the Act being that the Owner Builder warrants that:
A.
the owner builder work has been performed in a proper and workmanlike manner;
B.
all materials supplied by the Owner Builder were good and suitable for the purpose for which they were used and that unless, otherwise stated in the contract of sale or report required by the insurer to be obtained before the insurance contract is entered into;
and
C.
owner builder work was carried out in accordance with all laws and legal requirements
What Doesn't the Insurance Cover?
The insurance does not cover claims arising from things such as:
Fair wear and tear or failure of the homeowner to reasonably maintain the works.
Commercial construction work or commercial use of the work.
Defects that are identified in the inspection report which is undertaken prior to the issue of the Contract of Insurance.
Appliance or apparatus that are outside the manufacturers warranty period, or if no warranty period exists, the reasonable lifetime of the appliances or apparatus.
Defects which the purchaser should have reasonably been aware of at the time of purchase.
Acts of nature.
Period of Insurance
Owner Builder Warranty Insurance expires 6 years after the issue date of the occupation / final inspection certificate.
What is the Limit of Liability?
The legislation allows for a maximum limit of liability of $300,000 per job and a $500 excess to apply to the purchaser of the property for each claim made.
What happens if an Owner Builder sells and doesn't have Owner Builder Warranty Insurance?
An Owner Builder, who sells within 6 years of completion and fails to obtain Owner Builder Warranty Insurance, or attach an insurance certificate to the Contract of Sale, can face a fine of up to $22,000.
If a Contract of Sale has been entered into without Owner Builder Warranty Insurance, the contract can be voided by the purchaser at any time before completion of the contract.
What Information / Documentation do I need to provide?
Completed Proposal Form
Defects Report (Please call 1300 769 455 for details of an authorised inspector)
Copy of Owner Builder Permit (issued by Department of Fair Trading)
Copy of Current Council Rate Notice
Copy of Development Application
Copy of Electrical & Plumbing Compliance Certificates
