Building Defects – Where does insurance come into the picture?
Posted 20 May 2024
Category: Building Defects, eBooks
Building contracts for residential building work are required to include Home Owners Warranty Insurance where the strata scheme building is three storeys or less. The insurance is intended to cover the owners for the costs of rectifying defects.
Where claims are being made by the Owners Corporation against a builder or developer, it is important to notify the insurer of the claim, insurance may be denied in circumstances where notice is not given or notice is out of time.
At present, Home Owners Warranty Insurance is provided by a government instrumentality, iCare, providing a maximum cover per dwelling of:
- $300,000 if issues before 1 February 2012;
- $340,000 for all other policies.
If the strata scheme or building is over four or more storeys, the Strata Building Bond and Inspection Scheme may apply, which commenced in 1January 2018 to provide funds to the owners for remediation of defects. This is explained further below.
A strata’s insurance policy for the building does not cover building defects. It is only the Home Owners Warranty Insurance that covers building defects.
Home Owners Warranty Insurance is last resort insurance. The circumstances that will give rise to claims under Home Owners Warranty Insurance are in the event of the death, disappearance or insolvency of the builder.
This is an extract from our Bannermans Building Defects Guide – Part 1.
To access more FAQ'S on Building Defects fill in the below form to download our Bannermans Building Defects Guide – Part 1 for free.
