Why do WA Owner Builders need an Owner Builder Indemnity Inspection?

In WA, owner-builder indemnity insurance is mandatory for building works, extensions and new houses completed by owner-builders under a building permit. If you’re planning to sell the property you built or renovated as an Owner-Builder within seven years of the building permit being issued, you are required under WA law to provide the buyer with owner-builder indemnity insurance. Obtaining an owner-builder inspection report is generally a pre-requisite to obtaining this insurance.

1. What is Owner-Builders Indemnity Insurance?

Builders Indemnity Insurance is a compulsory insurance required by the Home Building Contracts Act 1991 (WA) “Act”.

2. What does Owner-Builders Indemnity Insurance cover?

The builders indemnity insurance is designed to provide the purchaser (and subsequent owners) with cover for the Statutory Warranties provided in the Act. Importantly, claims can generally only be made under these policies if the owner-builder dies, cannot be located or becomes insolvent. Otherwise, it is the owner-builder’s responsibility to rectify any faults that are listed as defects, incomplete works or issues with second hand materials under the defect report.

3. Who is required to have Owner-Builders Indemnity Insurance?

The legislation applies to any residential building work undertaken by an Owner-Builder, over $20,000 in value. This insurance only applies where the property is sold within 7 years from the Building Permit date in Western Australia. It is not required if the owner-builder does not sell the property within this period.

4. What is the required insurance cover period for Builders Indemnity Insurance?

Home Indemnity Insurance commences from the Building Permit date and extends for 7 years. The maximum limit of indemnity is generally $100,000.

5. What happens if an Owner-Builder sells without Owner-Builder Indemnity Insurance?

The Act indicates that where an owner-builder sells within 7 years from the Building Permit date and fails to obtain owner-builder indemnity insurance, or attach an insurance certificate to the Contract of Sale, they can face a fine of up to $10,000. If a Contract of Sale has been entered into without owner-builder indemnity insurance, the purchaser can void the contract at any time before completion of the contract.

6. Documentation required to support insurance applications

Owner-builders should check with their own insurance company and/or insurance broker as to the specific requirements that they may require for their proposed insurance application. In general, the following documents are required to support an inspection application.

• A completed proposal form
• A defects report, not more than 6 months old
• Your building license

7. Owner-Builder Indemnity Inspection Checklist

The following information is produced to help owner-builders prepare for an inspection by Houspect, to produce a report that can be submitted to your Insurance Company for owner-builders indemnity insurance.

What do you need to provide to Houspect on the day of the Inspection:

• Council Building Permit – complete including pages listing the council conditions. Original copy of the latest approvals including all amendments. Faxed copies not acceptable.
• Stamped and Approved Plans – building architectural and engineering drawings attached to building license as approved for construction by the local council. This needs to contain Council Approval stamp from the Building Department. Drawings stamped “Approved for Town Planning” are not applicable/acceptable.
• Certificate of Completion from the Termite Protection Company – stating that Part A and Part B termite protection has been carried out in accordance with Australian Standard AS3660.1, if a chemical barrier has been installed. Note: sticker in the meter box is often incomplete and not sufficient.
• Compaction Certificate from a structural engineer.
• WA Water Corporation Approval – Council Building Permits and sections 82 and 90 of the Water Services Act 2012 state a person must not construct, alter or demolish any building in the operating area of the Water Corporation, or erect, construct, install, place or demolish any building, plant, wall, fence or other obstruction in, on, over or under or within the prescribed proximity to the Corporation’s water service works, without first consulting with the Corporation and where necessary obtaining its approval. We need to sight the Water Corporations Approval for the building activity.
• Use of Second Hand Materials – Some polices require any second hand materials used on the build to be listed and on occasions these will be excluded from the policy. Owner-builders may want to bring these to the attention of the inspector so that they can make any observation as to the condition of those materials, assuming they can still be seen.

The next step in the process is to inspect the new home or extension to ensure construction has been completed in accordance with the plans, building and council requirements have been met, and that the workmanship is of good industry standard. Our report, together with your proposal, can then be forwarded to your preferred insurance company.

About your Houspect Building Inspector

In WA, building inspections and building inspectors are unregulated. As a consequence it is important that you have total confidence in the quality, skills, experience and professionalism of your building inspector. At Houspect WA:

• Every one of our building inspectors is a WA Registered Builder in their own right. Their Builders Registration number is recorded in every report.
• Every building inspector has a minimum of 20 years direct construction industry experience.
• Our building inspectors are fully insured with Professional Indemnity and Public Liability.
• Every inspection report produced by Houspect WA is subject to a minimum of two levels of quality assurance review prior to being released.
• Our state wide clients and building inspectors are supported by a dedicated, knowledgeable and experienced customer service team based in our Balcatta operations centre.
• All calls, enquiries or bookings are addressed promptly and professionally by our customer service team during our business hours of 8.30 am to 5.00 pm.
• Our building inspectors are located across the entire Perth metropolitan area and in most major regional centres in WA.

Houspect WA or its Directors maintain a number of important professional memberships including:

• Master Builders Association of WA
• Housing Industry Association
• Strata Community Association of WA
• Australian Institute of Conveyances WA

During the 20 plus years of operating in WA, Houspect has conducted in excess of 50,000 quality building inspections.

Buy, build and invest with confidence with Houspect WA.

For more information or to book an Owner-Builder Indemnity Insurance Inspection, call Houspect on Ph: 9240 8855, email us at info.wa@houspectwa.com.au or complete our online enquiry form.