Every state has a different name for a ‘Builders Warranty Insurance’: Home Indemnity Insurance, Domestic Warranty Insurance, Housing Insurance, the Home Building Compensation Fund. However, they all serve a common purpose: to protect the homeowner against a defective build. Building or renovating a home is an important investment. It is vital that consumers are afforded the protection necessary to successfully complete their project. This is where a builders warranty comes into place.
What is Builders Warranty Insurance?
This insurance covers a builder’s client against inadequate or unfinished work. Consumer law stipulates that a home must be liveable at the completion of the build, and the finished project must meet the consumer’s expectations. Builder’s warranty protection only extends to cases where it is not possible to recover costs from the builder themselves. This is known as a ‘last resort’ insurance model and includes cases of:
– Insolvency
– Deregistration
– Disappearance
– Death
The warranty will cover costs of up to $300,000 to amend structural flaws for a period of six years post-build. For non-structural defects, you are covered for two years. This includes out-of-pocket expenses including storage, removal and temporary fencing.
What does Builders Warranty Insurance cover?
Depending on what you have chosen, it may cover the following:
– If the building work hasn’t actually been commenced, the insurer may reimburse the deposit that was made to the builder/ building company under the contract
– Any additional costs required for defective work
– You may be entitled to compensation to complete the project if your builder has defaulted
Is Builders Warranty Insurance compulsory?
In Australia, the home warranty insurance varies between states and territories and it is compulsory. In every Australian state and territory, except Tasmania, contracts above a certain dollar amount are obliged to take out this insurance. The threshold varies from state to state: $20,000 in New South Wales and Western Australia, $16,000 for Victoria, and $12,000 for Queensland and South Australia.
How do I get Builders Warranty Insurance?
Sit back. If required, it is the responsibility of the builder to take out insurance for you. They need to present evidence of this insurance to the local council in order to acquire a building permit. Before you pay the deposit or allow the builder to commence work, make sure they have provided you with a certificate of warranty. Should you need to lodge a claim, present this to your insurer.
Who provides Builders Warranty Insurance?
In each state and territory, there is a small selection of private brokers who have been approved by the government to provide this insurance.
How do I claim Builders Warranty Insurance?
– Collect your certificate of insurance, copies of the contract, proof of payments to the builder, the plans and specifications of the construction, consultant reports, etc.
– Send these materials, the completed claim form, and the builder’s full details to your insurance provider.
– If you sell your home within the six-year period following termination of build, your insurance can be transferred to the name of the incoming owner.
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