Everyone who works on your building should have current certificates and insurance.
Home building compensation cover
The Home Building Compensation Scheme protects homeowners as a last resort if their builder cannot complete building work or fix defects because they have become insolvent, died, disappeared or had their licence suspended for failing to comply with a court or tribunal order to compensate a homeowner.
Information about the Home Building Compensation Scheme (previously known as Home Warranty Insurance) can be found on the State Insurance Regulatory Authority website at www.sira.nsw.gov.au
Contract works insurance
A builder or tradesperson should have contract work insurance. It is for your protection and covers the loss or damage to materials and work.
If the builder or tradesperson does not have this type of insurance, you may risk:
- time delays
- disputes (and possible financial loss) if materials are damaged or stolen.
Professional indemnity insurance
Professional indemnity insurance covers certifiers, architects, engineers and building consultants for claims against professional services provided. Services can include advice, design, certification, contract administration and project management.
Public liability insurance
Public liability insurance covers the builder or tradesperson if anyone is injured as a result of the building work. If the builder or tradesperson does not have this type of insurance, you could be liable because you own the property.
Workers compensation or SafeWork insurance
Make sure all employees are covered by their employer for workers compensation. This insurance covers employees who are injured on the building site.
If employers are not insured, you could be liable to pay the costs of any claim. In some circumstances, under the Workers Compensation Act 1987, these people are regarded as your employees.
Important: A builder or tradesperson who does not operate under a trade or company name cannot take out insurance to cover themselves. You should have your own minimum premium insurance just in case.
Contact SafeWork NSW for more information on workers’ compensation insurance or names of companies who provide this type of insurance.
Other insurance issues for homeowners
If you’re renovating or extending an existing home:
- notify your home insurance provider in writing before construction begins
- find out if your home and contents insurance policy will cover damage or theft to your home during the period of construction; sometimes, if you don’t inform your insurance company before the work begins, you may not be covered at all
- your lender (if borrowing money to fund the project) will want to see a current certificate of insurance to make sure you are protected
- if the value of your home has increased as a result of renovations, you may wish to increase the value of your home/building insurance policy.
Important: Always check with your home insurer or insurance broker before you sign a contract.