Mark Adams firstname.lastname@example.org
Getting Insured ... and getting it right
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 even insist that you show evidence that you've arranged owner builder insurance before commencing your project.
What if my local authority doesn't ask me to arrange insurance?
To become an owner builder you will need to do two things:
- Get a building permit, issued by your local council, and
- Get an owner builder licence.
Your local council will always advise that you must be insured properly, when 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.
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:
- Your name and email. This allows the quote to be stored and retrieved.
- The postcode where the project site will be located.
- 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.
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. If you are confident with the advice you've received, you may also choose to arrange the insurance at this time and nominate a start date. Your insurance advisor can arrange the insurance ahead of time to commence at the date you specify. 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 certain 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.