Certificates of Insurance

Certificates of Insurance

Introduction

A licensed builder is required under the Home Building Act 1989 to obtain insurance under the HBCF for a residential building project before commencing work on the project and before taking any money, including a deposit under the building contract, E.g. when contracting with a homeowner, owner-builder or developer.
 
A licensed builder undertaking a ‘speculative’ residential building project on property owned by that builder is required under the Act to obtain HBCF insurance cover for the project before commencing work.

Work requiring HBCF insurance 

The requirement for HBCF insurance to be in place for most residential building work is also a standard condition of a Development Consent under the Environmental Planning and Assessment Act 1979. If the conditions of the Development Consent are not complied with an Occupation Certificate and/or Final Insurance Certificate may not be able to be issued for the work.
 

Important Notice to Builders

Builders should NOT quote, tender or contract for projects which are outside their approved eligibility profile or without first obtaining eligibility. The builder should first apply via their broker for eligibility or to have their eligibility profile amended to cover the project that they are interested in undertaking. Refer to the Eligibility section of this website for information.

The requirements to be satisfied in order to obtain eligibility or have their eligibility profile amended may involve the builder incurring costs that should be taken into consideration when quoting, tendering and/or contracting for a project E.g. requirements to participate in the Building Contract Review Program (BCRP), increase equity in the business etc.

Making application for a Certificate of Insurance 

A builder requiring a Certificate of Insurance for a building project and having first obtained eligibility for insurance under the HBCF can apply through their broker. Approved Distributor list can be accessed here.
  
The Underwriting Guidelines contain further information on specific underwriting considerations applying to architect/designer managed work and other types of projects including:
  • Applications Outside Eligibility Profile
  • Project Application Value Above Construction Limit
  • Applications by Builders Subject to BCRP
  • Rectification Work on Multi-unit Buildings
  • Work on Behalf of Developers
  • Speculative ‘spec’ Construction
  • Project Management Contracts
  • Multi-Unit and High Value Constructions (over $1million)
  • Contract Variations
  • Retrospective Cover.

Work on existing multi-dwelling buildings

The Home Building Act 1989 provides in the case of work such as repairs, maintenance, renovations etc carried out to the common property of an existing residential flat building (i.e. a building containing two or more dwellings) the cover provided is calculated as follows:
  • where the value of the work is more than $20,000 and the amount obtained by dividing the value of the work by the number of dwellings in the building does not exceed $20,000, the policy provides cover up to a maximum total of $340,000 - in this instance only one Certificate of Insurance is issued to the Body Corporate/Owners Corporation or owner showing the cover provided.
  • if the amount obtained by dividing the value of the work by the number of dwellings in the building is more than $20,000, the policy provides cover up to a maximum amount of $340,000 per dwelling - in this instance either one Certificate of Insurance showing the cover for each dwelling provided or individual certificates for each dwelling may be issued to the Body Corporate/Owners Corporation or owner.
For example:
  • cost of work is $32,000 ÷ 8 units = $4,000, therefore $340,000 cover is provided for the job;
  • cost of work is $320,000 ÷ 8 units = $40,000, therefore $340,000 cover is provided for each dwelling.