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Multi-storey buildings 

Home Building Compensation Fund requirements

Work exempted

Building contractors doing residential building work for the construction of a new multi-storey (high-rise) building are not required to arrange insurance under the Home Building Compensation Fund (previously Home Warranty Insurance).

A developer who enters into a contract for sale of land on which exempted work has been done, or is to be done, is not required to attach a certificate of insurance to the sale of contract.

For the purposes of the exemption, a multi-storey building is a building that:

  1. has a rise of more than 3 storeys, and 
  2. contains 2 or more separate dwellings.

Note: the definition of both a rise in storeys and a storey has the same meaning here as in the Building Code of Australia of the National Construction Code series.

Work not exempted

Construction of a new multi-unit residential development (where the rise is 3 storeys or less, eg. villa units, town houses, low and medium rise projects etc) does require insurance under the Home Building Compensation Fund. In this instance, a developer is required to attach the certificate of insurance to the contract for sale of such dwellings.

Similarly, an insurance certificate under the Fund must also be taken out before residential building work is done on an existing multi-storey building (eg. repairs, maintenance, alterations and additions etc).

Work on an existing residential flat building

Insurance cover under the Home Building Compensation Fund is required for work to a residential flat building (eg. repairs, maintenance, alterations and additions etc).

A ‘residential flat building’ means any building or part of a building containing two or more strata, community scheme or company title home units (including any garage or storage area that is included in the same title as the unit).

The cover that must be provided in respect of work to the common property of an existing single residential flat building or to the whole building (if the whole building is owned by the same person) is as follows:

  • where the value of the work is more than $20,000 and the amount (obtained by dividing the value of the work by the number of dwellings in the building) does not exceed $20,000, the contract of insurance must provide cover of no less than a total of $340,000
  • if the amount (obtained by dividing the value of the work by the number of dwellings) is more than $20,000, the contract of insurance must provide cover of no less than $340,000 in respect of each dwelling in the building.

For example:

  • cost of work is $32,000 ÷ 8 units = $4,000, therefore $340,000 cover must be provided for the job
  • cost of work is $170,000 ÷ 8 units = $21,250, therefore $340,000 cover for each dwelling must be provided.

For policies issued between 1 May 1997 and 28 February 2007, the minimum cover that had to be provided was $200,000. From 1 March 2007 to 31 January 2012, the minimum cover to be provided was $300,000.

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