What is Construction Risk Insurance?
You’ve made the decision to build, and chosen your builder – now you want to know that your build is insured! Here at Mincove Homes, we ensure all our clients the peace of mind of knowing that we have arranged Home Owners Warranty Insurance (which we call Construction Risk Insurance) to cover them for the entire duration of their new build.
WHAT IS HOME OWNERS WARRANTY INSURANCE?
Home Owners Warranty Insurance (also known as Contract Works Insurance) is taken out to cover a specific construction project, and the coverage is generally arranged by the principal or head contractor of the build.
Home Owners Warranty Insurance provides the cover of licensed builders and licensed tradesmen’s responsibility to insure their clients against loss or damage to the project, plus legal and contractual obligations in relation to the construction taking place.
Your Home Owners Warranty Insurance will cover physical loss, destruction or damage to property, as well as legal liability for third party injury and property damage.
The policy provides indemnity for insured parties reflecting the provisions of the contract entered into.
Coverage is generally extended to include the contractor, the principal, sub-contractors, financiers and other interested parties to the contract.
WHO NEEDS HOME OWNERS WARRANTY INSURANCE?
Builders are traditionally the main occupation that take out a Contracts Works Insurance policy.
However, the requirements for this type of cover has also now been spread further include:
- Tradespeople who run their own jobs/projects
- Sub-contractors who run their own projects on the side
- Owner Builders
In NSW, any building works over the amount of $20,000 requires Home Warranty Insurance.
WHAT’S COVERED IN MY CONSTRUCTION RISK INSURANCE WITH MINCOVE HOMES?
Specifically, Construction Risk Insurance provides access to two main sections of coverage.
Section one covers Material Damage occurring on the job site, and section two covers Public and Products Liability for third party property damage or third party bodily injury arising out of negligence.
Let’s break these two sections of coverage down..
This insures protection for the insured works in respect of accidental damages, including those caused by fire, theft, water damage, flood, malicious damage, storm or cyclone, landslide and earthquake.
Public and Products Liability
This section covers you for your legal liabilities in relation to the construction works taking place, during and after completion.
WHAT ELSE DOES HOME OWNERS WARRANTY INSURANCE COVER?
Home Owners Warranty Insurance also covers the following items, which will generally be additional contractual requirements under a construction contract:
This includes cover for the costs of re-engaging architects, engineers, surveyors and consultants, up to 10% of the contract value.
Removal of Debris
This includes cover for the demolition and disposal of contract works if required, including the removal of debris and silt, regaining access to the site and restoring work conditions, up to 10% of the contract value.
Materials in storage
This includes cover for damage to materials to be used in the contract works, that are in storage off-site but within the area specified in the contract, whilst awaiting transit to the build site.
Materials in transit
This includes cover for damage to materials to be used in the contract works whilst in transit arising from fire, storm, flood, collision and/or overturning of the transportation, or by theft or malicious damage.
A Home Owners Warranty Insurance policy should also include a provision to provide protection in the event that escalations and/or variations to the initial contract result in the project exceeding the limit of any one contract.
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