DO YOU NEED TO GET INSURANCE WHILE YOUR HOME IS BEING BUILT?
Getting a home built is a major project, and once the initial excitement is over after arranging things, people often think of any risks that may be involved, and one of the questions that comes up is whether you need to get insurance while your home is being built.
The short answer is no, but we’d better explain it in a bit more detail before we finish the blog!
Firstly, this is assuming that you’re engaging a registered builder to build your home and not going owner-build. Owner-build is a completely different field and this blog is not about that.
A registered builder is required by law to take out an insurance policy that covers the risks involved in building your new home. It’s generally called a construction policy, and it covers things like storm damage, theft, accidents, etc. It’s tied to their builders licence and is limited to maximum amount of money per house. And a building contract between you and the builder is not legal unless it includes this policy (always check that it’s current).
So if something goes wrong during the build such as the partially built house catching on fire, then the builder would claim the costs of repair and rebuilding under their insurance, not yours. This is why you technically don’t need insurance.
But there are a couple of grey areas, so let’s explain the longer answer of ‘maybe you need insurance, maybe you don’t’.
The first one is if you’ve got other assets on the property where the house is being built. This could include a shed, fencing, livestock, pool, even things like a septic system and landscaping. You’ll no doubt already have your own insurance cover on your property that covers these items, but you need to make your insurance company aware of the construction, especially in a situation where the home is going to be close to these assets, increasing the potential risk of damage if something goes wrong with the house construction (like fire spread, etc).
The other instance is to do with timing. When the home is complete, and the occupancy certificate is issued, the builders insurance stops, so that’s when you need to get insurance over your new home. But when the home is nearing completion, say 3 or 4 weeks before it’s ready for handover to you, we recommend getting an insurance policy in place.
This means that if something happens right at the end, then there’s an overlap of insurance policies so it’s covered, regardless of what the insurance companies might say – they can’t wriggle out of it just because it may have appeared to be complete!
There are also other insurance policies that the builder has, but that’s another subject – perhaps another blog.
So sit back, relax and enjoy the journey of getting your new home built, knowing that the builder has insurance to cover the risks involved.
Keen to find out more?
Reach out to us. We’re here to help.