Whether mandatory or recommended, insurance is a topic every builder needs to be across. The possible consequences if you’re not properly covered simply don’t bear thinking about. MADELEINE SWAIN investigates.
Having the correct insurance in place is part of operating a well-run business in the building trade. The insurances and schemes can vary depending on where you operate. Mandatory across all of Australia is the Domestic Building Insurance (DBI), otherwise known as Home Warranty Insurance. This is a consumer protection cover, protecting homeowners in the case of death, disappearance or their builder becoming insolvent and cover for the homeowner in the event the builder fails to comply with a court order.
DBI has to be obtained before any work commences. “It’s a legislated product and is compulsory for all licensed builders. It is required for works that exceed a certain amount, for example $16,000 in Victoria; this threshold differs in each of the individual state schemes,” explains Wayne Goldsworthy, a representative at Marsh Advantage Insurance (MAI). “Each of the states operates independent schemes. In Victoria, there are multiple insurers offering DBI – AssetInsure, Berkshire Hathaway and the government insurer, which is the VMIA (Victorian Managed Insurance Authority).” In many other states there are currently single government providers. Victoria has seen a reinvigorated market in recent times with multiple insurers providing competition and premium relief from a previous monopoly-style scheme. MAI has been instrumental in assisting the building industry with providing the best possible DBI facility option. “Having the choice of multiple insurers for our clients provides an option for each of our builder clients’ different circumstances,” Goldsworthy says.
The premiums also vary greatly. An average cost for homeowner’s warranty insurance could be around the $1000 mark for a $300,000 build and up to $3000 in other states.
Apart from the mandatory insurance (DBI), builders should also consider Contract Works and Public Liability insurance. Goldsworthy says that nearly all builders will and should have this policy because “it protects the builder as an insured party for any damage to the works during the construction period… and also any damage or injury to third parties or their properties. It’s in place for the life of the construction period.
“The majority of policies are placed on an annual basis as it affords better cover and is also more price-effective that way,” says Goldsworthy.
Other recommended insurances for the building industry to investigate include those covering Professional Indemnity, Management Liability, Cyber Liability, Commercial Motor Vehicles, Display Homes, General Property (for your tools of trade) and business insurance.
Insurance is an extremely broad topic and one where it pays to seek some advice. As an insurance broker, Goldsworthy negotiates with a range of insurers to get the best possible solution for his clients. “A lot of builders come brand new into running their business and don’t know what type of insurance they need, so it’s important to talk to an expert in this space,” he says.
“We have been assisting builders with their insurance requirements for a long period of time and can offer our industry specific advice to building companies across the country.”
This was originally published in issue 02 of Better Building.
Image courtesy of Marsh Advantage
Marsh Advantage Insurance Pty Ltd (ABN 31 081 358 303, AFSL 238 369) (MAI) arranges the insurance and is not the insurer. Wayne Goldsworthy (Insurebuild Pty Ltd ABN 31 081 358 303) is an authorised representative (AR No.000341715) of MAI. This is general information only and does not take into account your individual objectives, financial situation or needs. For full details of the terms, conditions and limitations of the covers, refer to the specific policy wordings and/or Product Disclosure Statements available from Marsh on request. Any statements concerning legal matters are based solely on our experience as insurance brokers and risk consultants and are not to be relied upon as legal advice, for which you should consult your own professional advisers. LCPA 18/0020