How Home Indemnity Insurance Works in WA

How Home Indemnity Insurance Works in WA

Home Indemnity Insurance (HII) is a critical safeguard in Western Australia (WA) for both builders constructing residential homes and consumers engaging a licensed builder. It ensures that homeowners are protected if unforeseen circumstances arise, such as the builder's insolvency, death, or disappearance during or after the construction process. Here's a breakdown of how it works, who it benefits, and why it's essential.

What is Home Indemnity Insurance?

HII is a compulsory insurance in WA for residential building work valued at $20,000 or more. The purpose of this insurance is to protect homeowners from financial loss if their builder is unable to complete the project or rectify defective work due to insolvency, death, or disappearance. The policy also covers structural defects for six years from the date of practical completion.

How does it work for Builders?

For licensed builders in WA, obtaining HII is a legal requirement before commencing any residential construction work that meets the $20,000 threshold. Here's how builders interact with HII:

1. Application Process: Builders apply for HII on behalf of their clients through an approved insurer.
2. Certificate of Insurance: Once approved, the builder provides the homeowner with a Certificate of Insurance specific to their project. This document must be issued before accepting a deposit or starting work. The builder must also submit the Certificate of Insurance to the permit authority as part of the building approval process.
3. Premiums: Builders pay the insurance premium upfront and typically factor this cost into the contract price.
4. Obligations: Builders must adhere to all contractual obligations and maintain proper licensing to avoid breaching HII terms.

By obtaining HII, builders demonstrate their commitment to compliance and consumer protection, fostering trust with their clients.

How does it work for Homeowners?

For consumers, HII provides peace of mind and financial protection throughout the construction process and beyond. Here's what homeowners need to know:

1. Coverage: HII covers loss of deposits, incomplete work, and defective work under specific circumstances, such as the builder's insolvency, death, or disappearance. The policy extends to structural defects for six years after practical completion.
2. Certificate of Insurance: Homeowners must receive a Certificate of Insurance from their builder before construction begins, ideally before signing a contract. This certificate confirms that the project is covered under HII.
3. Claims Process: If issues arise, homeowners can lodge a claim with the insurer. Supporting evidence, such as contracts, receipts, and proof of defective or incomplete work, will be required to process the claim.
4. Exclusions: HII does not cover all scenarios. For example, it does not apply to owner-builder projects or issues unrelated to builder insolvency, death, or disappearance. Homeowners should review the policy terms carefully.

Why is Home Indemnity Insurance important?

For builders, HII ensures compliance with legal requirements and promotes professional credibility. For consumers, it provides a safety net against unexpected financial losses, offering reassurance that their investment is protected.

In Western Australia, Home Indemnity Insurance is not just a legal formality; it's a vital safeguard for all parties involved in residential construction. By understanding its function and importance, builders and homeowners can navigate the construction process with greater confidence and security.

How Coverforce can help

At Coverforce, we specialise in providing a full range of insurance solutions for residential builders. From Home Indemnity Insurance to Contract Works Insurance, Management Liability Insurance, and Motor Fleet Insurance, our experienced brokers can assist with all your coverage needs.

With the right insurance in place, you can focus on building with confidence and peace of mind. Contact Coverforce today to learn more about how we can support your business.

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