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Owner Builder Insurance - getting it right
Owner building can be a greatly rewarding activity. Remember to think of yourself as a 'builder,' and to approach all matters involving your project with that mind-set, and the risks can be managed, so you can also retain some peace of mind and sanity.
When insurance is needed
A builder, regardless of whether they are a registered builder or an owner builder, faces 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 as an individual so that you can assume the role of 'builder' for your project, and this requires that you insure correctly.
The obvious risks are those that result in your own material loss or damage, and these are purely a financial risk that to some degree may be manageable without insurance, although that's not possible for most people. The even 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 will usually insist that you show evidence that you've arranged owner builder insurance before commencing your project*.
* In Tasmania, you need to arrange the insurance before you will even get project approval!
Your local council will always advise that you must be insured properly, with a particular focus on Public Liability.
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.
When should you start getting advice
When 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 when you do need to arrange cover your advisor can update your quote with the details already used. This will save you time later and allow you to include the insurance cost into your budget.
Remember that the insurance will be covering you for 'replacement value', so this 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.
When to get a firm quote
Once you are 30 days or less from expecting to commence work on your project, contact your insurance advisor again to update the quote. By this stage you may also need to provide the local council with evidence that you've arranged insurance, so requesting that cover be arranged now will allow you to provide this evidence.
When to start cover
If you've not already requested the cover to be arranged at the quote stage, be absolutely sure to arrange cover prior to commencing work on the project. If you neglect to do so, the insurance will become more expensive, and you will be uninsured for any losses (injury liability in particular) between the time that you start works and the time that you then arrange the insurance.
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