What is an owner builder and why do they need insurance?
An owner builder is someone who manages construction on their own home in the same way a licensed contractor would. To be an owner builder you must hold an Owner Builder Permit.
If you’re planning on building your own home, you’ll need to have the right insurance cover in place to provide financial protection from start to finish. Owner builder insurance provides cover across two areas: construction and public liability. Construction insurance provides protection against loss caused by theft, malicious damage, fire, weather and workmanship during the building process, while public liability insurance guarantees that you are protected for your legal liability when the construction results in bodily injury to a third party or damage to their property.
What types of insurance do owner builders need?
Owner builders need to consider an insurance policy that provides the following types of cover:
- Public liability. When you’re constructing or renovating a home, it creates a range of hazards on a property that would not usually be present. Public liability insurance provides protection if a legal liability claim is brought against you following an injury to a third party or damage to their property. This includes cover for damages or compensation you are required to pay, the cost of your legal defence, and the claimant’s legal cost if their claim is successful.
- Construction. Construction insurance offers financial protection for a wide range of risks, including malicious damage or vandalism, or loss caused by burglary, theft or defective work. Damage caused by fire, storm, wind or water is also covered. This includes cover for demolition and disposal costs and the removal of debris.
- Existing property. Many home and contents policies will be void once you commence building works on your property, which means you won’t be able to claim for any damage caused to your existing property or contents during a renovation or extension. With this in mind, you may wish to look for a policy that covers your existing structure and contents.
- Warranty insurance. You may also need to find warranty insurance that covers the purchaser of the property. For example, if a Victorian property owner sells their house within six years of completing owner builder works, they will need to provide warranty insurance to whomever purchases the property.
Loss and damage for which the policy provides no cover
Despite its many benefits, there are several risks and situations that owner builder insurance does not cover, including:
- Injuries or death to voluntary workers on your project. You will need voluntary workers insurance if you want this sort of cover
- Liability for personal injury to anyone employed by you. You will need workers’ compensation insurance if you want this type of cover
- Property damage caused by a fault, error or omission in material, workmanship, design, plan or specification
- Electrical or mechanical breakdown of a machine
- Moths, termites, vermin, mould, mildew, dry rot or dampness
- Gradual deterioration, corrosion, abrasion or wearing away
- A delay or interruption to work due to any strike or labour disturbance
- Consequential loss
- The costs of normal maintenance
- Loss of or damage to cranes and other stationary or mobile plant and equipment
- Loss of or damage to any property while in transit
- Legal liability if you intentionally or recklessly cause bodily injury or property damage
- Any lawful destruction or confiscation of your property
- Any loss, damage or legal liability caused by the abandonment of the works
How much does it cost?
When you apply for owner builder insurance, you’ll need to provide a range of details about your construction project to help the insurer calculate the cost of cover. These include:
- The location of the building site. For example, it may be located in a high-crime area or in an area that is prone to severe storms.
- The nature of the work being undertaken. The more complex the project, the more you can expect to pay for cover.
- The value of the works. The greater the cost of the work being undertaken, the higher your premiums will be.
- Your previous insurance and claims history. This will be taken into account by the insurer to determine the likelihood of you making a claim on your owner builder insurance policy.
Owner builder quote
Before you choose an owner builder insurance policy, it’s important to compare quotes from a range of insurers to determine which policy provides the best value for money. If you’d like to receive an owner builder insurance quote, simply enter your details in the form on this page. Provide some basic information including your name, contact details and project specifics, and an insurance provider will get in touch as soon as possible to discuss your cover needs.
Q. What if I’m hiring a licensed builder or contractor to complete the building to lock-up, can I still get cover?
- Yes, you can still qualify for an owner builder insurance policy in these circumstances.
Q. Can I take out cover if I have already started construction?
- Yes, some insurers are able to offer cover for works that have already commenced.
Q. Will my existing structure and contents be covered?
- The cover provided under many home and contents policies becomes invalid when construction work begins. Many owner builder policies will provide cover for your existing structure and contents, but check the policy fine print to make sure you will be protected.
Q. Will I need to pay an excess when I make a claim?
- Yes, you will usually be required to pay an excess, but the amount payable varies depending on the policy.
Q. Will my family and friends who volunteer to help out on the project be covered?
- No. You will need to consider voluntary workers insurance if you require this type of cover.
Q. Will my family be covered for personal injury if they live on-site?
- No. This type of cover is not included in owner builder insurance policies.
Q. Am I still insured when construction is completed?
- No. Cover ceases once a final inspection certificate has been received by the insurer.
How to make a claim
- Your insurer will provide advice and guidance on what to do if you need to make a claim on an owner builder insurance policy. The exact process may vary from one insurer to the next, but the first thing you will need to do is notify the insurer as soon as possible after the loss, damage or liability occurs. Failure to do this within 30 days may result in your claim amount being reduced.
- You must take all reasonable steps to minimise the loss, damage or liability, and to prevent any further loss, damage or liability occurring. You will also need to preserve any evidence that may be useful in the processing of your claim, hold on to damaged property so it can be inspected by the insurer, and report matters of theft or vandalism to the police.
- Finally, it’s also worth remembering that you must not admit any liability, nor authorise any repairs or replacement without the insurer’s consent.
Owner builder insurance provides crucial protection for your construction project and is a legal requirement. Compare a range of owner builder policies to find the right cover for your project.