Building indemnity insurance
Building indemnity insurance is taken out by a building work contractor when performing domestic building work costing $12,000 or more that requires council approval.
Building indemnity insurance can only be taken out and paid for by a builder's license holder. You can not get this insurance if you are carrying out the building work yourself.
This includes when you are:
- building a house
- performing renovations
- building an extension.
This insurance protects the current and future building owner if:
- work has not been completed or faulty work has not been 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.
It is your responsibility to protect and insure any items you own that are at the building site during construction and to insure the building when construction has been completed.
When building indemnity insurance is needed
Your building contractor is responsible for making sure that this insurance is in place. Building work can not start until all of the following actions have been completed:
- building indemnity insurance has been taken out by the building contractor
- you have received a copy of the certificate of insurance
- the council has 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. If you do not understand any conditions you should ask your contractor to clarify them.
The certificate of insurance
The contractor must give you and the council a copy of the certificate of insurance before any work begins. You should keep a copy of the certificate of insurance for your own records. The information on the certificate will include:
- the name of the person insured
- the name of the insurer
- details of any limitations on the liability of the insurer
- the name of builder
- the builder's license number
- the date the insurance was issued
- a description of the building work insured
- any conditions that apply when making a claim.
When you sell the property you must disclose to the purchaser whether or not indemnity insurance is in place.