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Choose your builder wisely

Why Home Indemnity Insurance Exists

Recently, Today Tonight (Channel 7 Perth) reported the story of a home owner’s renovation dream turned into a nightmare after employing an unregistered and unqualified builder to carry out works of $44,000 for a patio, an alfresco area and re-roofing a kid’s playroom. A botched renovation left the Perth home owner with a leaking roof, mould infested floor and a clean-up bill of almost $100,000. When the tradie was ordered by the Building Commission to make the building safe, he declared bankruptcy so he doesn’t have to pay. The home owner paid Ross around $35,000 out of the $44,000 contract.”

This reinforces the importance of asking the right questions before entering into an agreement (any agreement really), or simply asking your trusted insurance broker for invaluable advice. After all, your broker is only a phone call away. 

Under the Home Building Contracts Act 1991a builder must take out home Indemnity Insurance in the owner’s name before commencing work for the building works valued over $20,000 and pay for the insurance premium. 

The owner should always ask the builder to provide a copy of the certificate of insurance before paying a deposit. If a builder is unable to provide this document, then the builder mostly likely is not the right person to carry out the work. A building permit will not be granted without the home indemnity insurance upon application.

If the builder dies, disappears or becomes insolvent, the home indemnity insurance policy provide the following covers:

  •  up to $20,000 for loss of deposit

  •  the completion of the work up to a limit of $100,000

  •  potential claims for defective workmanship made up to six years from practical completion of that work

If the property is sold during construction or during insurance period of indemnity, the home indemnity insurance also protects subsequent owners.

Click here to watch the full story on 7Plus.

Residential builders, click here to find out how we can help you increase Eligibility Limits for Builders Warranty Insurance.

Helpful information:

Resources for Having Your Home Built or Renovated: 

Before employing a builder you should always check that their registration or licence is current on the register:

For further information or advice, contact the Building Commission on 1300 489 099 for the cost of a local call from anywhere in the state or email

By Mei Huang

Senior Account Executive


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