Written by Jake Brady

What Insurances Does a Builder Need?

With all the excitement and decision making involved in building a new custom home, insurance might be the last thing on your mind. But it shouldn’t be – insurance is crucial. It ensures that you’re covered in the case of complications or damages and guarantees that those working on-site are safe and protected. This is essential in the building trade, where on-site works come with a high risk of injury and/ or material damages. 

It’s crucial to make sure that the builder you choose for your home building project is covered by a number of insurances. Here are the key ones to look for:

Home Building Compensation Cover 

Across Australia, Home Building Compensation (HBC) cover, previously Home Warranty Insurance, is compulsory for most residential works. These policies are determined and managed by individual states, and the stipulations vary from each state government. What this means is that if a claim arises, the government pays out the insurance claim to the homeowner. HBC cover must be taken out prior to construction commencing and a builder must provide proof of the insurance before starting work or asking for any payment or deposit.

HBC cover protects homeowners against, “non completion of the building contract” and “failure of the builder to correct faults”. It helps homeowners in the case that their builder is unable to complete or fix works because they have become insolvent, died, disappeared or had their license suspended for failing to comply with a money order. In NSW, HBC cover is required on all building works above $20,000. 

Construction Works and Public and Product Liability Insurance 

Construction Works and Public and Product Liability Insurance (also known as Contract Works Insurance) covers builders, contractors and tradespeople against damages or losses to a residential building project. It also covers these parties in relation to legal and contractual obligations involved in the build. 

Largely, this cover helps protect builders in the case of accidental or malicious material damage. Accidental damage could mean an environmental calamity such as fire, earthquake or flood; while malicious damage could mean a break-in or vandalism. 

The Public and Product Liability Insurance part of this coverage helps protect builders against third-party injury or property damage caused by negligence. 

It’s important to check your builder has this coverage, as it will protect your new home during and after construction. 

Workers Compensation 

Workers Compensation is a legal requirement for all workers in NSW, not just builders and construction workers. It helps employees receive compensation for lost wages, covers the cost of medical treatments, supports workers re-entering the workforce and sometimes provides compensation for non-economic loss.

If you’re looking to build a South Coast custom home with a reputable and insured builder, get in touch with the team at Smartbuild South Coast today. We’d love to hear more about your home building project.