The types of Owner Builder Insurances
Being an Owner Builder is an exciting, challenging and rewarding opportunity.
Here at The Owner Builder Club, we want you to think like a builder and act like a builder because at the end of the day, you are!
Just as a builder would, it’s important for you to understand the different types of owner builder insurances. Here’s a summary:
Public Liability and Full Material Cover
Public Liability and Full Material Cover is one policy (two separate sections). One section is called Public Liability or Legal Liability (terms are interchangeable) and the other is Contract Works (Material Cover).
Public Liability is arguably the most important insurance for an Owner Builder. It’s also an insurance often required by Council.
As an Owner Builder, site safety is your responsibility. Public Liability covers an owner builder for any 3rd party injury or damage. Taking out Public Liability really is a no-brainer and beats the risk of being sued for endless amounts of money!
Material Cover on the other hand is what covers you in the event of a fire, storm, earthquake, malicious damage, or theft of building materials. Material Cover may also be required if you’re borrowing money for the project (banks like to know you’ve got material cover).
Workers Compensation is only recommended in some states and only for some Owner Builders.
The Workers Comp exposure Owner Builders generally come up against is when they are dealing with Sole Traders vs Pty Ltd contractors. There's a difference with insurances for Sole Traders and Pty Ltd contractors.
IMPORTANT – Workers Compensation insurance is a complex area and differs by state. It’s best to get expert advice for this type of insurance.
Group Income Protection (or Voluntary Workers Insurance)
Owner Builders will often have good hearted and enthusiastic friends and family offer to help.
Therefore there could be people working on the site that are not being paid and therefore are called volunteers working on the project.
There’s a policy designed for that and it’s called Group Income Protection Insurance and/or (depending on level of cover taken out) Medical Expenses Cover. Broadly referred to as Voluntary Workers Insurance.
There's also an option for this cover to include the owner builder doing work however if an owner builder is only managing the project and not doing any of the work, then it’s not necessary.
Injury to volunteer workers is a common claim so don't get caught out.
Home Warranty Insurance
Home Warranty Insurance, also known as Home Indemnity Insurance (in WA) and Domestic Building Insurance (in Vic), is designed to protect the purchaser of an owner builder built house from defective workmanship in the event that an owner builder dies, disappears or is insolvent.
It’s NOT required during the build and further, it’s only required in Victoria and Western Australia.
In Victoria, known as Domestic Building Insurance, it’s required if selling an owner built home where work done was valued over $16,000 and the home is being sold within 6 years and 6 months of completion.
In Western Australia, known as Home Indemnity Insurance, it’s required if selling an owner built home where work done was valued over $20,000 and the home is being sold within 7 years of the building permit being issued.
This information is current as at April 2020. It’s important to note that state rules change so if you are considering selling your owner built home, be sure to check any updates to this rule with your state government!
So there you have it, a summary of the main types of owner builder insurances.
If you’re after a super quick on-the-spot quote simply click here 😊