Who is covered by the owner builder warranty insurance?

Owner Builder Domestic Building Insurance (DBI) (also commonly referred to as Owner Builder Warranty Insurance) is for the benefit of the purchaser or subsequent purchaser of your property and not the owner builder. It covers the home owner in certain circumstances where the building work is incomplete or defective and the owner builder has died, disappeared, or become insolvent or, if the insurer is VMIA and the insurance was issued after 1 July 2015, the builder has failed to comply with a tribunal or court order.

Owner Builder Warranty Insurance may also cover expenses such as alternative accommodation, removal and storage that are reasonably and necessarily incurred up to 60 days.

Do I have to buy the owner builder Warranty Insurance?

In Victoria, under section 135 of the Building Act 1993, an owner builder shall not enter into a contract to sell or dispose of the dwelling or the land (on which the dwelling is constructed) unless the owner builder warranty insurance is in force. The exception to this is if the value of that domestic building work is less than $16,000 at the time the work was carried out as an owner builder.

What happens if I do not buy the owner builder Warranty Insurance?

In Victoria, an owner builder who sells and fails to obtain Owner Builder Home Warranty Insurance can risk fines and penalties of $15,546 under section 135 of the Building Act 1993 (fines and penalties subject to change after 30 June 2017). In addition, if a contract of sale has been entered into without Owner Builder Home Warranty Insurance, the purchaser has the right to void the contract and have their deposits refunded in full.

How long am I responsible as an owner Builder?

The Warranty period under the Building Act 1993 is 6 years from the issuing of the certificate of occupancy or final inspection. Therefore, insurance is required when an owner builder sells their dwelling within the Statutory Warranty period.

How long am I covered under the insurance policy?

The insurance cover depends on whether loss or damage is arising from non-structural defects or causes other than non-structural defects.

  1. Non-Structural Defects: The insurance policy provides cover for any loss or damage arising from non-structural defects commencing on the date of contract of sale and ending 2 years after the completion date for the work. As a result, if you are selling your house more than 2 years after the completion of the work, the policy does not cover any loss or damage arising from a non-structural defect.
  2. Other Causes: The insurance policy provides cover for any loss or damage arising from other causes other than the non-structural defects commencing on the date of contract of sale and ending 6 years after the completion date for the work.

How much the insurance company will pay in the event of the claim?

The insurance company will not pay more than $300,000 in total for all claims made under this policy for each home.

Do I have to pay for any excesses?

Yes, you have to pay the following amounts for each claim under the policy:

  1. Any amount for claims under $500 made between 3 to 12 months after completion of the work
  2. The first $500 for claims made between 1 to 3 years after completion of the work
  1. The first $1000 for claims made later than 5 years after completion of the work

 

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