If you’re starting a building project, you should consider taking out Owner-Builder insurance. There’s no better way to protect your home in case of fire and water damage, theft, vandalism, and any other accident that may occur.
So, how much does Owner-Builder insurance cost, and what are the different types of this insurance?
Let’s find out!
How Much Does Owner-Builder Insurance Cost?
The cost of Owner-Builder insurance is not predetermined, and it needs to be calculated on an individual basis. The average cost of builder’s risk insurance can go from $40–$80 per month on a standard policy to a multi-million dollar policy. However, there are some factors that are taken into consideration when determining the cost.
- Location – The place where your building is located, along with its specific nature, significantly impacts the overall cost.Type of building – This includes the size, nature of the building, and the material used during construction.Coverage – The quality, high-end insurance tends to cover a lot more than cheap insurance would.The extent of construction – Starting from scratch and building a new construction will cost more than partial renovation like restumping a house or undepinning.
What Types of Owner-Builder Insurance Are There?
There are three types of Owner-Builder insurance that will cover any damage to your building, personal injury, third-party injury, and defective or incomplete work.
Owner-Builder Construction Insurance
When you undertake a building project, you will most likely use heavy machinery. Construction insurance covers the materials and machinery you’re using and any damage inflicted on others and their property. In case your equipment and machinery break down or get stolen or vandalised, the construction insurance will compensate for the damage.
Additionally, construction insurance provides coverage if your project or property is maliciously damaged or destroyed in fire, storm, wind, or water. Some insurers pay for additional expenses, such as:
- Removing debris;Demolition and removal of prior structures;Demolition and removal of undamaged parts;Professional fees.
You might be interested in finding out how much house demolition costs across Australia in 2022.
Public Liability Insurance
While working on your building project, a public member might get injured, or their property may get damaged due to the work you’re undertaking. As a result, an expensive public liability claim can be made against you. To protect yourself from such a financial drain, take out public liability insurance. Here is what the public liability insurance covers:
- Damage and compensation from third-party injury or property damage;The costs of your legal defence;The third-party legal cost and expenses in case of successful public liability claims;Public liability for physical damage or destruction of goods that are in your possession or control.
Builder’s Warranty Insurance
Unlike the previous types of insurance, Builder’s Warranty insurance is a compulsory insurance for anyone doing building work. This insurance applies in situations when the contract builder has failed to complete their work or the work turned out defective. In that case, the owner gets compensated for six years if financial loss incurs.
That said, the Builder’s Warranty insurance can only be utilised if the builder dies, disappears, or goes bankrupt during the construction process.
Who Is Recognised as an Owner-Builder?
Generally, an owner-builder is someone who builds or renovates a building on their own land and is not hired as a builder. They are the ones responsible for the building process, as they hire builders to work for them. Anything that happens during the building or renovation, like a third party getting injured or property getting damaged, is the responsibility of the owner-builder. Furthermore, It’s the owner-builder who pays for the builders’ risk insurance.
However, keep in mind that owner-builder is defined differently across Australian states, so it would be wise to check what it refers to in your residential area.
Is It Compulsory To Have Owner-Builder Insurance?
It’s not compulsory to have Owner-Builder insurance; however, having one can set your mind at peace in case an accident happens during the building process. No one can predict water or fire damage or theft, so it’s better to be safe than sorry. There could be situations when bodily injuries or property damage appear due to the construction without your direct influence on it. A public liability claim could be made against you, and you would have to deal with financial damage.
Bottom Line
Owner-Builder insurance cost depends on factors such as location, type of building, cover, and extent of construction. Although Owner-Builder insurance is not compulsory, it’s worth considering before you start the building process. Once you invest in this type of insurance, you won’t have to worry about additional costs regarding potential damages and injuries.
1.What insurance do I need as an owner-builder in Victoria?
Owner-builders in Victoria are required by law to take out domestic building insurance, also known as Owner-Builder Home Warranty insurance. This only applies in cases when the work done in the house is valued at over $16,000.
2.What insurance does an owner-builder need in NSW?
Any owner-builder in NSW needs home building compensation (HBC) cover for each home building project over $20,000, including GST.
3.How do I become an owner-builder in QLD?
To become an owner-builder in Queensland, you will need to complete and pass a certified Owner-Builder Course. The next step would be to apply for a permit from the Queensland Building and Construction Commission (QBCC).
4.What are the insurances of a builder?
So, what insurance does a builder need? To make things clearer, you can take out three types of insurance: Owner-Builder Construction insurance, Public Liability insurance, and Builders Warranty insurance. To see what they cover, go back to our guide, “How Much Does Owner-Builder Insurance Cost?”.
