Building indemnity insurance

Building work contractors must arrange and pay for building indemnity insurance. This is required  for any domestic building work that must be approved by council and costs $12,000 or more.

This insurance protects you and future owners if:

• work is not completed or faulty work is not rectified
• the builder dies, disappears or is declared bankrupt.

Claims can usually be made up to five years from the date the building work was completed.

You cannot take out building indemnity insurance if you are carrying out the building work yourself.

Check if there's a valid building indemnity insurance policy in place.

Before work begins

Building work cannot start until all the following actions are complete:

• building indemnity insurance has been taken out by the builder
• both you and the council have received a copy of the certificate of insurance.

It is recommended that you read the contract and the certificate of insurance carefully. Do not sign any documents until you understand and are satisfied with all the terms and conditions. Always ask your contractor to clarify any conditions you do not fully understand.

Certificate of insurance

You should keep a copy of the  certificate for your own records as it includes:

• the builders name and licence number
• the insurance company
• the date the insurance was issued
• a description of the work insured
• any limitations or conditions of the policy.

Contact the insurance company to verify the insurance details and to ask any questions about how the insurance works.

When you sell the property you must disclose whether or not indemnity insurance is in place.

Other insurance needed

You will also need to:

• protect and separately insure any items you own if they are at the building site during construction
• insure the building when construction is complete.