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Owner building is a financially and
mentally rewarding way to pass a year
or so of your time. As long as you
remember to think of yourself as a ‘builder,’ and to approach all matters
involving your project with that
particular mind-set, the risks can be
managed in such a way as to allow you
to also retain some peace of mind.
When insurance is needed
A builder, regardless of whether
they are a registered builder or an
owner builder, faces some very
specific risks and responsibilities
that need to be managed, and
that means also having the right
insurance.
If you’re an owner builder you
need owner builder insurance; there
are really no exceptions to this rule.
An owner builder license is issued
to you so that you can assume the
role of ‘builder’ for a construction
project, and this requires that you
insure responsibly. The obvious
risks are those that result in your
own material loss or damage, and
these are purely a financial risk for
you i.e. can you afford the loss?
The bigger issue is that of Public
Liability exposure. As a builder you
will be held responsible for damage
caused to anyone else’s property
and even more importantly, for
any injury caused to a third party.
Serious or even permanent injuries
can occur on even the smallest
projects, which is why your local
authority may insist that you show
evidence that you’ve arranged
owner builder insurance before
commencing your project.
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What if my local authority does not insist that I arrange insurance?
To become an owner builder you will
need to do two things:
1) Get a building permit, issued by your
local council, and
2) Get an owner builder licence.
Your local council will always advise
that you must be insured properly IF
they pay attention to the fact that you
are also an owner builder. If you were
engaging a registered builder instead,
the builder would hold these insurances
already, so your council would not
need to advise you on this issue. For
this reason, the matter is sometimes
overlooked and you may not be told of
this requirement. This does not remove
the need however. Always be prepared
and be insured. Remember, the smaller
the project the smaller the cost of the
insurance, so there is no reason to use
the size of your project as a potential
reason to put the thought aside.
Who supplies the required insurance?
You should contact a broker who
specialises in owner builder insurance.
A few select insurers can also directly
provide owner builder insurance,
however a specialist provider is generally
more able to give you competitive rates
while also providing individualised
and expert advice. You can find an
appropriate specialist by asking your
owner builder training provider (if
you have done a course) for their
recommendation, or by searching
online or in the Yellow Pages. |
When should you start getting advice?
In the earliest stages of preparing
to be an owner builder you will find
yourself looking into various expenses
and getting quotations. You may even go
through this activity before you decide
if becoming an owner builder is right
for you. Get some advice on insurance
and a rough quotation at this stage. The
quote will normally only be valid for 30
days but this is okay, as when you do
need to arrange cover your advisor will
already have all your details, and you can
simply update the quote. This will save
you time later and allow you to include
the insurance cost into your budget.
What information will you need?
In order to get an initial quote there
is actually very little information you
will need. Many people delay getting a
quote on the assumption that they will
not yet have the information that will
be required. Here’s what information
you will need to provide in order to get
a basic quote:
1) Your name. This allows the quote to
be stored and retrieved later.
2) The postcode where the project site
will be located.
3) A basic project description. For
example ‘New single storey house,’
‘Renovation/Extension,’ or ‘Shed
construction.’
4) The project value.*
* Remember that the insurance will be
covering you for ‘replacement,’ so this dollar
value is not what the project is expected
to cost you but what it would cost the
insurer to pay for the same project to be
done again by a registered builder. Use a
rough figure at this stage if you are unsure.
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