Rumours and Fallacies
Adam Weaver firstname.lastname@example.org
A mate of a mate told me ...
... isn't usually the way to start any factual discussion. Unfortunately there is a lot of misinformation on the 'net and misunderstandings around the risks and legal obligations of owner builders; let us try to set the record straight.
Contractors having insurance is enough
This is a common fallacy we've talked about before.
Even if you're 100% diligent and ensure that all of your sub-contractors have their own insurance coverage, what do you suppose that does for you?
The contractor's insurance covers the contractor. It does nothing for you as the builder. You still need to insure your own legal liability and your own project against damage. No contractor insurance is going to pay to repair your project following storm or fire; that's up to you as the builder.
I don't need workers compensation for my "80/20" subcontractors
The "80/20" thing is something to do with income tax; it has absolutely nothing to do with the subcontractor being deemed to be your worker within the terms of your state workers' compensation act. Even if you think your subbies should have had their own insurance, at law sole trader contractors may be able to make a workers compensation claim against you.
Unfortunately it's never as clear cut as we would like; working out whether a contractor is indeed a worker depends on the exact relationship between you and the contractor at the time of the injury. We always encourage owner builders to talk to WorkCover in your state (iCare NSW in NSW) to find out your exact obligations. But get the advice in writing!
The council said I need Warranty Insurance when building
The council's probably confused you with a registered builder. Warranty Insurance covers the risk of the builder going bankrupt and either being unable to finish the project or there being defects in the project discovered after completion. It makes no sense for owner builders (and is not required) during the construction phase - you can't exactly insure yourself against the risk of going bankrupt!
Hence owner builders do not need and absolutely cannot buy warranty insurance during the building phase. It's required only when an owner builder is selling the owner built property during the statutory warranty period, and even then only in VIC and WA.
While you're building, you need Owner Builder Construction Insurance.
My home insurers are covering the house while I renovate
Are they? Are they really? Have you asked specifically, and had assurance in writing?
Most home insurers are insuring homes for living in, not homes on and part of an active construction site. Most in fact say that they will not pay for any damage caused by the renovation. Some go further (depending on the value of the renovation) and say that they won't provide any cover for the home from any cause.
If that's the case, you need Existing Structures cover to insure the home building against damage. We offer two levels of cover (standard existing structures and deluxe existing structures) depending on what you need us to insure.
Then get the real info from the experts
At Allrisk we've been specialising in owner builder insurance for over 10 years, and can give you expert advice to save you money and make sure that you're not leaving yourself exposed.
Our online quote form takes around 90 seconds to complete, and will instantly e-mail you a quote along with various options to consider. Don't leave yourself short, and don't pay for insurance you don't need!
Let us show you what we can do for you today.