Owner Builder Warranty Insurance and Inspections: What You Need to Know

If you build your own home—as in, you undertake the actual construction, rather than just working with designers and builders to bring your vision to life—then you may be required to have owner builder warranty insurance. The same is true if you personally conduct renovation work on your home. So, what is owner builder warranty insurance and why do you need it? Read on to learn more.

Who Needs Builder Warranty Inspections and Insurance?

The first thing that you need to understand is that laws about builder warranty inspections and insurance coverage vary slightly depending on where you are in Australia. As such, it is always best to consult a professional before you sell a home that you built or renovated on your own. At Resicert, we are happy to talk with you about builders warranty insurance and what your obligations are as a homeowner and seller.

The other important thing to remember is that you will not need owner builder warranty insurance unless you are planning to sell your home. If you build your house, move in, and then proceed to live there for 20 years, you will never need builders warranty insurance. Even if you do sell after those 20 years, you won’t need this builder warranty insurance, because your home will have essentially passed the test of time.

In most cases, you will only need owner builder warranty insurance if you decide to sell your home within six years of building or renovating it. In some parts of Australia, the rule is seven years, so be sure to consult those in the know. The six-year timeline starts at the date of your Certificate of Occupancy or Certificate of Final Inspection. Beyond those first six (or seven) years, you are free to sell without warranty insurance (also known as home indemnity insurance).

Why Is Builders Warranty Insurance Important?

If you do sell your home within that initial six- or seven-year window, then you will need to hire someone to conduct a builder warranty inspection. This inspection will look at the structural components of your home, from the floors to the roof and including both interior and exterior elements. The inspection is a necessary step for obtaining warranty insurance.

Builders warranty insurance is an important safeguard for you as the builder, current owner, and future seller of the home in question. This type of home indemnity insurance covers your eventual buyer from any construction or renovation work you did that proves defective. This coverage extends for six or seven years after the Certificate of Occupancy or Certificate of Final Inspection. At best, failure to have this insurance coverage may make potential buyers wary of purchasing your home. At worst, it could lead to thousands of dollars in fines (for you) while also giving the buyer the freedom to opt out of the contract of sale at any time.

In other words, if you built your own home and want to sell it quickly, legally and without major hiccups, then owner builder warranty insurance is a must. Call Resicert on 1800 RESICERT to consult on the laws in your area or schedule your builder warranty inspection.