Owner Builder Insurance

How much does owner builder insurance cost?

Owner builder insurance is a type of insurance designed specifically for individuals who are building or renovating their own property without hiring a licensed builder.

Insurance can be good to have because you face the same risks and need for insurance as a registered builder.

Who’s classified as an owner builder?

An owner builder is someone who takes on the responsibility of managing and overseeing a construction or renovation project on their own property. Owner builders can be individuals who own the land on which the construction or reno is taking place, property investors who plan to work on and then sell the property, and sometimes developers too.

How does owner builder insurance work in different states of Australia?

Each Australian state and territory has its own legislation on exactly who constitutes an owner builder, so it’s important to familiarise yourself with the relevant legislation where you live for full details. But as a general rule, an owner builder is someone who constructs or renovates a residential building on their own land, and who is not otherwise employed as a builder.

Owner builders basically act as the general contractor for their building project, hiring out work to subcontractors across a range of trades. They’re also responsible for the building schedule and assume any liability associated with the project, which means they assume all the responsibilities (and associated risks) that a registered builder would normally take on.

State-by-state insurance requirements

State	Insurance requirements during building	Your insurance requirements when selling the property
NSW	Builders, contractors or tradespersons must have home building compensation (HBC) cover for jobs costing more than $20,000. This covers incomplete work.	If you selling a house within 7 years and 6 months: You must include a 'consumer warning' in the sale.
Victoria	Builders, contractors or tradespersons must have domestic building insurance for jobs costing more than $16,000. This covers incomplete work.	If you selling a house within 6 years and 6 months: then an owner builder must have domestic building insurance that covers for issues with the building.
Western Australia	Builders, contractors or tradespersons must have home indemnity insurance for jobs costing more than $20,000. This covers incomplete work.	If you selling a house within 7 years: then an owner builder must have home indemnity insurance that covers the purchaser for issues with the building.
South Australia	Any building work contractors must take out building indemnity insurance for work costing $12,000 or more to cover completion of work e.g. this covers incomplete work.	Claims can be made up to 5 years from the date building work is completed. So it's a good idea to ensure there is building indemnity insurance if selling within 5 years of the building work being completed.
Tasmania	To get an owner builder permit you're required to have liability insurance for personal and property damage on the site and construction liability cover for damage to the property where the owner builder has legal control of the premise the premise. The minimum amount of cover is $5 million.	N/A

What insurance do I need to build, renovate or alter my home?

You typically need to take out some form of builders insurance if the renovation or construction costs more than a specific amount – for example, $20,000 in NSW.

Workers compensation insurance

This is likely to be the only compulsory form of insurance you'll need. For example, you probably won't need workers compensation insurance since it's likely you're only engaging with contractors.

Public liability

It's unlikely that you'll be required to have public liabilty insurance because it's your worksite. Some make public liability insurance compulsory for workers to be allowed on site. However, it's might be included with your builders insurance policy. If not, then you should consider taking out cover.

How much does owner builder insurance cost?

The cost of owner builder insurance is not fixed and needs to be calculated on an individual basis. However, there are certain factors considered by insurers when determining an appropriate premium. These factors include:

• Type of building. The size and nature of your building will affect the costs of owner builder insurance. The materials used in construction also affect the price you pay.
• Location. Where your building is located can affect your premium. The specific nature of your building site may also affect the insurance cost.
• Quality of cover. You always get what you pay for. A really cheap insurance policy will often fail to cover you for everything you need when things go wrong.
• Extent of construction. Building a completely new structure will cost more in insurance terms than a partial renovation.

Talk to a broker about owner builder insurance

Frequently asked questions

• Is owner builder home warranty insurance the same as owner builder insurance?

  Owner builder home warranty insurance covers the subsequent purchaser of your property, not you as the owner builder. The policy provides cover in case you (the owner builder) die or become insolvent and the building works are incomplete or defective.

• Does owner builder insurance cover public liability?

  Yes. Owner builder insurance can cover public liability insurance but make sure you check beforehand. Cover can vary between providers and the specific type of builders insurance you get.

• Can I get cover if I have already started construction?

  Unfortunately, many insurers will not be willing to provide owner builder insurance cover if you have already started your construction project. With this in mind, it’s recommended that you find the right owner builder insurance policy before starting work, especially if you are relying on financing from a lender to complete the project – without the proper insurance in place, you may have trouble finding a lender who will let you borrow the funds you need to finish the construction.

  There are some insurers that may offer you cover for projects that have already commenced, but the cover will typically cost more than it would have if you had taken out a policy before starting work.

• I am only doing renovations: will I be covered by my home and contents?

  Home and contents insurance policies do offer a range of additional benefits on top of the loss or damage cover they provide for your building and possessions. Depending on your policy, you may receive some cover for your home and contents while renovations or extensions are being undertaken.

  However, there are a couple of key risks associated with relying on home and contents cover. First of all, most insurers will only offer a limited level of coverage for renovation works, usually up to a maximum of $50,000. However, not all policies offer this type of cover, and it’s a good idea to notify the insurer of your renovation project and obtain written confirmation of exactly what they will and won’t cover.

  Cover may be suspended while renovations are being carried out too. Many insurers will suspend the home insurance and public liability cover while the renovations or extensions are taking place, especially if they’re above a certain cost limit or particularly complex. This could have a significant impact on the cover for the existing house against loss or damage caused by the building work, as well as on the public liability protection your policy provides.