I'm building a new home: Do I need home indemnity insurance?

Date Friday, 11 December 2015 12:00 AM

The new home building journey is an exciting path, however there are a number of factors to keep in mind. One of these is home indemnity insurance, but is it something you should be worried about?

When building your own home, knowing what insurance you need is essential.When building your own home, knowing what insurance you need is essential.

Definition of home indemnity insurance

Across Australia, 'home indemnity insurance' is not the only name for this type of cover. It may also be called a home warranty or building compensation. As the property owner, you aren't actually responsible for taking out an indemnity plan, in fact your expert home builder will be the one to do so. However, it is for your protection.

Home indemnity insurance is taken out by a builder, contractor or other tradesperson to protect you, the owner, against financial loss should the work not be completed. There are any number of reasons a tradesperson might not complete a build and a warranty plan should cover you in most of these, including worker insolvency or death.

This insurance, however, does not cover worksite accidents that cause property damage nor theft of building materials or equipment left by either you or the builder.

What do you need to know?

Knowing that home indemnity insurance is a legal Australian requirement is the first step. When you are negotiating contracts with your builder, they should present both you and the council an insurance contract with all the necessary details therein. This must occur before any documents are signed or payments made.

Though you likely already meet the following eligibility criteria because you are designing a new home, each individual state has its own minimum cost limit before indemnity insurance is a requirement. See below for more details:

  • QLD: Home warranty insurance - minimum $3,300, maximum liability cover of up to $200,000
  • NSW: Home building compensation fund - minimum $20,000, minimum cover of $340,000
  • ACT: Residential building work insurance - minimum $12,000, max cover up to $85,000
  • VIC: Domestic building insurance - minimum $16,000, max cover of up to $300,000
  • SA: Building indemnity insurance - minimum $12,000, max cover up to $80,000
  • TAS: Home indemnity insurance - minimum $12,000, max cover up to $200,000
  • WA: Home indemnity insurance - minimum $20,000, max cover of up to $100,000
  • NT: According to insurance provider QBE, NT does not have legislative insurance requirements of this type

If you're ever unsure, talk to the friendly professionals at your local G.J. Gardner Homes office for advice.

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