As members know, the State Insurance Regulatory Authority (SIRA) has been checking if building businesses are buying compulsory home building compensation insurance.
SIRA found some businesses broke the law because they did not insure customer deposits for home building work.
It is important you understand your insurance obligations.
When should home building insurance cover be taken out?
Some businesses told SIRA they thought they did not need insurance until starting the building work. Some thought they did not need insurance until a construction certificate was issued. This is not correct.
If your business is contracting to do building work that needs home building insurance, you must have insurance before you take any payment for the work (including a deposit) or start the work.
If your business is taking deposits from customers without first having insurance, you may be committing an offence.
Find out more about insurance obligations
Building contract values must be declared and updated on completion
When applying for home building compensation insurance, a building business must state the value of the work. This enables the insurer to calculate the correct premium price. The insurer will also ask the business to confirm the final price on completion, including any variations. This ensures any premium adjustment can be made to reflect the final cost of the work.
A business that deliberately understates the value of the work in order to gain a benefit may be committing an offence. It is important that applications for insurance reflect the contracted value of the work, and the completion advice must state the actual cost at completion.