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Is the home you are buying less than 6 years old? Are you buying an established home that has been built, renovated or extended by an owner builder? Knowing more about Home Indemnity Insurance could save you thousands.

What is Home Indemnity Insurance?

For residential building contracts over $20,000 in WA, the Home Building Contracts Act 1991 requires the builder to take out insurance in the name of the homeowner before accepting payment or commencing work.

Home Indemnity Insurance will protect owners against financial loss if a builder cannot complete residential building work, or meet a valid claim for faulty and/or unsatisfactory building work because of insolvency, death or disappearance.

What Does Home Indemnity Insurance Cover?

Generally, the insurance will cover the owner for the period during construction and for 6 years after practical completion. Practical Completion is reached when the residential building works are complete and ready for occupation.

Multi-storey multi-unit developments, (over 3 levels) as defined by the regulations, and retirement villages that are intended to be leased do not require Home Indemnity Insurance.

The insurance cover protects subsequent owners if the property is sold during construction or during the period of indemnity cover. i.e. the benefit of the policy will pass onto subsequent owners.

The policy must require the insurer to pay $100,000 or the value of the contract (if it is less than that amount).

Home Indemnity Insurance and Owner Builders

Owner builders are not required to take out Home Owner Warranty Insurance before they build. But if they sell with 7 years from issue of the building permit they must obtain it.

A registered builder who wishes to build their own home is not required to obtain Home Indemnity Insurance. However it will be required if they sell the home within 7 years from issue of the building permit.

For owner builders or builders seeking to obtain Home Indemnity Insurance, a valid Building Defects Report must be carried out by a building inspector. The insurer will also require the Building Inspector to carry valid Professional Indemnity insurance.

How Home Integrity can help!

There are three ways Home Integrity can help.

  1. Help you as the homeowner lodge a claim for faulty or unsatisfactory building work with a builder
  2. Help you lodge a claim with your insurer if the builder is no longer in business
  3. Provide Owner Builders wanting to sell, with a Home Owners Warranty (HOW) report for their HOW insurer.

Should you require further information about Home Indemnity Insurance, a fact sheet available for download on Building and Energy’s website located here.

If you need any of the above services please click here or phone Anne on 61184942 or 0420803292