Are you building a house anytime soon?
Hopefully, all parts will come together, and construction will be completed beautifully without any glitch. However, things are not always in our control and especially when some error happens due to the builder’s fault, or you are not satisfied with the finished product, what is the next option?
While you may have taken all the precautions and preparation from your end, it is also important that you ensure that all parties involved in it have also done so.
That is why there are options for insurances where you will not lose money of your pocket if the builder does not deliver.
Builders Warranty Insurance
For the circumstances as mentioned above, a builders Warranty Insurance would be your savior. It is a type of insurance that provides cover to protect homeowners against incompetent builders. It is supposed to help fix any construction errors caused by the builder or get money in return if you lodge a legitimate claim.
This type of insurance goes by different names in different states of Australia. In Australian Capital Territory and New South Wales, it is called Home Warranty Insurance, while in Northern Territory it is Residential Building Insurance. Residential building insurance, Building Indemnity Insurance, Domestic Building Insurance, are among the other names.
This insurance is usually mandatory for construction of new houses and even renovations depending on the house situation and the value of the works. This again varies from state to state and territories. With a vetting standard that satisfies only the pickiest, Renovation Builder Brisbane ensure that your expectations will be met, if not exceeded.
What does builders warranty insurance Cover?
The insurance is designed to provide cover if
- The builder dies or disappears.
- The builder is bankrupt.
- The builder license is revoked.
- The builder refuses to rectify poor construction work or does not return your money.
The last one might require you to go to a tribunal and would take considerable time to get a claim. Finding the right finance broker can literally save you tens of thousands.
Is building warranty insurance mandatory?
In all Australian states except Tasmania, it is mandatory for contractors to have a Builders Warranty Insurance. In Tasmania, it is no longer obligatory after the government inferred that the insurance does not offer enough value as it is could only be reclaimed if builder, died disappeared or became insolvent, and the chances of that happening were slim. Custom Home Builders Brisbane gets you 3 competitive quotes from the most trusted builders.
Who pays for Builders Warranty Insurance?
It is usually the builder who has to take the Builders warranty. It is indeed a mandatory prerequisite that all the registered builders should have taken the insurance before the beginning of the construction. If it is a legal requirement, the builder will have to submit proof of insurance to the local council to get the development application approved.
As a homeowner, it is your responsibility to ensure that the builders have taken this insurance. The contractor should provide you also a copy of the Builders Warranty certificate, which you will need to register a claim if required. Choose the right Brisbane builder for your home.
Builders Warranty Insurance in Different States and Territories
The schemes for builders warranty insurances differ across different states and territories. House builders Brisbane in Queensland need to have insurance for any works estimated over $3,300.
In NSW and WA, if the building work costs above $20,000 then you require a home warranty Insurance. In VIC, the amount is $16,000; in SA and ACT, it is $12,000. The maximum cover allowed also varies. Our house and land packages Brisbane got you covered from $50K renovations to $5M projects.
It is often considered a tricky business to get claims. Many argue that it is almost unattainable and is counted as the last resort. In Queensland, however, things are better. That is one of the reasons why licensed builders Brisbane has to offer the most quality work.
Queensland offers the highest rate of consumer protection. The Building Service authority (BSA) manages everything from licensing of builders, home warranty insurance and dispute management.
In states Victoria and NSW, these insurances are managed by state-directed home insurance funds, Managed Insurance Authority (VMIA) and the NSW Home Warranty Insurance Fund respectively.
When to take Builders Warranty Insurance?
If it is legally required according to the construction costs, then the insurance should be in place before the construction starts. The homeowner should also make it a point whether the insurance provides cover for the course of the entire construction and a certain period usually for a few years after the construction is completed.
It could also be mentioned in the contract that the builder has procured the Builders warranty insurance and has given the proof before they accept any payment, including deposit. You can check with the local council to see if there are any other obligations you need to fulfill concerned to the insurance.
Once the construction is completed, the insurance cover is considered in two parts.
- A longer period for any structural defects that are usually set at six years.
- A shorter period of cover for two years for any non-structural defects.
The coverage period is calculated based on the scope of the build and the state. It would depend on whether it is a new build or renovation. Choosing the right building designer is important as it can make or break your project.
How to Claim
If your builder dies, disappear or is bankrupt before any complaint about the build was resolved, you can resort to the builder’s warranty insurance.
You will need to submit the following documents to register the claim.
- The builder certificate of the insurance
- Details of the builder
- Copies of the contract signed by homeowner and builder
- Proof of any payments made to the builder
- Evidence of uncompleted work and termination of the contract
The insurance company will further investigate the case and ask for any further information if required. It would also include an inspection of the site, to assess the fault or incomplete work.
The claim could be offered in terms of repairs, or as an amount to cover the damages. The catch here is that it will not cover any legal cost, which could at times exceed the amount you are claiming. Get in touch as one of our friendly team members will get back to you within 48 hours.
The one solution to avoid such situations is to find the right builder for your work. TrustCo can help you find the Brisbane building experts from our expert Brisbane builders list.