Thursday, February 7, 2013

Home Insurance

If an owner builder wants to sell his home within 6 years of construction, he cannot do so without having home insurance. The certificate of insurance has to be attached with the sale deed. Apart from owner builder, the ones who need to take this insurance include any builder who takes a construction or work contract from a home owner, developer of a residential property who has got it built from any builder and wants to sell it and any builder who wants to construct a residential building for sale on property owned by him.

Even major renovations mean that you have employed veritable construction resources which are often subject to mishaps like low quality materials used, defects in the building structure, construction left incomplete etc. Solid home  insurance means that you as the owner builder as well as the new owners are protected against any expenses that arise out of these defects.

Home  insurance is mandatory under the Australian law though it may differ in different jurisdictions. To get idea you can take a look at the Home Building Act 1989 and Home Building Regulation 2004 for New South Wales; the Building Act 1993 for Victoria; Building Work Contractor's Act 1995 for South Australia; Home Building Contracts Act for West Australia and the Building Act 1972 for the Australian Capital Territory.

There are specified risks indemnified under home insurance. These may change from state to state but the basic message is the same.

Home  insurance broadly covers the following two aspects / risks:

Loss due to incomplete work: This insurance indemnifies the home owner against any monetary loss arising due to the construction work left incomplete or not started on time, post acceptance of the building contract. This could be due to any reason like disappearance of the builder, license of the builder being suspended, etc.

In such cases the owner builder can claim for loss on account of advance paid, loss on loan amount, etc. The claim is payable only to the certain percentage of the total construction value. Thus anything paid as advance or deposit above such level will not be covered.

Loss due to substandard construction: If there are any defects found in the construction of the property during the course of construction or post the completion of the project owing to use of substandard materials or construction practice, etc. the owner builder or the subsequent owner can claim for the loss occurred due to such damage. The claim period will range from 2 years to 6 years of completion of work depending upon the defects.

An Owner builder can claim any loss only if he has compiled with all the statutory requirements like permits and other regulations as stated by relevant jurisdictions. In the event of his death or insolvency the new owner can claim best home insurance and get the damages repaired before or after moving in. For them it is a new home and there is no reason why they should go ahead with the deal if the property is not sufficiently insured against all unforeseen circumstances.

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