In WA there are special requirements placed on Owner Builders selling homes that they have built. In short they are required to take out an Owner Builders Indemnity Insurance Policy.

1. What is Owner Builders Indemnity Insurance?

Builders Indemnity Insurance is a compulsory insurance required by the Home Building Contracts Act 1991 (WA) “Act” .

2. What does Owner Builders Indemnity Insurance cover?

The Builders Indemnity Insurance is designed to provide the purchaser (and subsequent purchasers) with cover for the Statutory Warranties provided in the Act. Importantly, claims can generally only be made under these policies if the Owner Builder dies, cannot be located or becomes insolvent. Otherwise, it is the Owner Builders responsibility to rectify any faults that are not listed as defects, incomplete works or second hand materials under the defect report.

3. Who is required to have Owner Builders Indemnity Insurance?

The legislation applies to any residential building work undertaken by an Owner Builder, over $20,000 in value. This insurance only applies where the property is sold within 7 years from the Building License date in Western Australia. It is not required if the Owner Builder does not sell the property within this period.

4. What is the required insurance cover period for Builders Indemnity Insurance?

Home Indemnity Insurance commences from the Building License date and extends for 7 years. The maximum limit of indemnity is generally $100,000.

5. What happens if an Owner Builder sells without Owner Builder Indemnity Insurance?

The Act indicates that where an Owner Builder sells within 7 years from the Building License date and fails to obtain Owner Builder Indemnity Insurance, or attach an insurance certificate to the Contract of Sale, they can face a fine of up to $10,000. If a Contract of Sale has been entered into without Owner Builder Indemnity Insurance, the purchaser can void the contract at any time before completion of the contract.

6. Documentation required to support Insurance applications

Owner Builders should check with their own insurance company and or insurance broker as to the specific requirements that they may require for their proposed insurance applications. However, in general, the following documents are required to support an inspection application.

· A completed proposal form

· A defects report, not more than 6 months old

· Your building license

Houspect is well versed in providing reports to Owner Builders to assist them in securing the requried insurance. Simply call Houspect WA and we can generally arrange the requried report within 5 business days