WA’S building regulator is urging people building a home to not pay deposits before seeing evidence the builder has a home indemnity insurance policy in place for their project.
The advice from Building and Energy applies to residential building work valued over $20,000.
Under the Home Building Contracts Act 1991, builders must take out home indemnity insurance (HII) in the owner’s name and provide them with a copy of the policy before accepting payments or starting work.
Building and Energy Executive director Saj Abdoolakhan said HII was an important safeguard for homeowners because it protected against financial loss for incomplete, faulty or unsatisfactory work in the event that the builder died, disappeared or became insolvent.
“In most cases, the insurance policy must cover the building work during construction and for six years after practical completion,’’ he said.
“While most industry members are doing the right thing, we have become aware of some cases where the builder may have accepted money for home building projects that are not covered by HII.
“We are monitoring this closely and I also urge consumers to do their due diligence before paying a deposit.”
Consumers can source HII information from their builder or QBE, which is the main HII provider in WA, via wa.homeindemnity@qbe.com or 1300 790 723.
A fact sheet on HII is available at the Building and Energy website.
Preparation of plans agreements (PPAs) – which involve a builder’s initial site assessments and planning before a contract is signed – are not covered by the Home Building Contracts Act or HII.
PPA-related costs are often not refundable if a building contract does not progress.
