If you are planning on new construction in the near future, you are not alone. While the construction industry has taken some hits from the pandemic and its fallout, an estimated 111,500 new residences are set to be in the works in Australia between 2020-2021.
While traditional construction companies will build many of these homes, a number will originate with an owner-builder. If you are considering being one of these individuals, you need a wealth of knowledge. This includes knowledge of owner builder insurance.
Who is Defined as an Owner Builder?
You are defined as an owner-builder if you plan on doing any of the following without a registered builder:
- Build a new residence
- Expand on a current residence
- Renovate your present home
Pros and Cons
For many people, the idea of constructing their own home sounds economical, exciting, and empowering. Others can think of few things that could be worse than building the place they will live. A third group falls somewhere in between the first two groups.
If you are undecided or want to know a little more, here are a few of the pros and cons of being an owner-builder.
- Control over the design and materials is in your hands
- You have flexibility because the schedule and time frame are your decisions
- You can expect to save money by building yourself. The exact percentages you may save can vary, but you will eliminate the middleman by taking on the construction your self
- You may encounter unexpected difficulties
- The build could take more time and money than you expected
- You shoulder all responsibility during construction and for six and a half years after the work is complete
- It is up to you to make sure all work, whether it is done by subbies or you, it up to the proper codes and the work completed complies with all statutes
- You are responsible for honouring all implied warranties. Also, remember these warranties will transfer to new owners for up to ten years
Why Should I Get Owner Builder Insurance?
When you take on the role of owner-builder, you also take on the responsibilities of a registered builder. The position of a registered builder makes you liable for the safety of subcontractors or visitors on your property.
Other reasons for getting owner-builder cover:
- The subbies you hire may not have the appropriate cover
- Your risks are identical to those of a registered builder
- The standard home and contents policy is generally not enough to cover you as an owner-builder. Often, the act of construction or renovation is enough to nullify or diminish the coverage of your existing policy
- Your state may require some form of owner-builder cover before permitting the construction
What Type of Insurance Cover is Available?
There are several kinds of policies well-suited for owner-builders. To find out specific requirements in your area you should speak to an insurance expert at Connect Business Insurance.
- Public Liability – Because even the best trained and most professional workers can experience accidents, you should have public liability cover. Your public liability insurance will take care of third-party damages or injuries.
- For example, Freddie is building an apartment above his garage. His friend, Ed, visits to see the project and falls over building materials breaking his arm. Because Freddie has public liability cover, payments for Ed’s injury and expenses are not Freddie’s responsibility.
- Personal Accident or Injury Cover – This policy pays if the owner-builder experiences an injury on the job site.
- For example, Freddie falls from the roof and goes to the hospital for treatment. He will not pay out-of-pocket expenses for his treatment if he has a personal accident or injury policy.
- Construction Insurance – A construction insurance policy covers the job site and contents against unforeseeable events like theft, vandalism, storms, water, or fire damage.
- For example, while Freddie and his family are asleep, a thief takes all of the roofing material. With a construction insurance policy, Freddie can get new materials without spending his money.
Other Potentially Helpful Types of Insurance for Owner Builders
- Workers Compensation – This insurance will apply to you if you have employees who are working on your construction site. Additionally, if you are employing workers, all Australian states and territories require some form of workers compensation cover
- Voluntary Works Cover – If you have family members, friends, or neighbours helping you on your construction for free, a voluntary works policy will pay if they experience a loss because they are helping you on your worksite
- Builder’s Warranty Insurance – Having a builder’s warranty insurance policy is a good precaution in the event that the work is somehow faulty or not completed. However, not all states allow owner-builders a builder’s warranty policy.
While there are numerous good reasons to become an owner-builder, be sure that you look at all sides of the matter carefully before you commit. Also, remember to consult with an insurance expert to work out the owner-builder insurance cover you need before you begin your project.
*Please Note* The material that is included in this post is given in good faith, for informational purposes only. This does not replace a one on one conversation with an insurance professional and is not legally binding.