Insurance and warranty

32 terms in insurance and warranty

Builders warranty insurance

Builders warranty insurance, also called home warranty insurance, is the compulsory cover most Australian states require before residential building work above a threshold, protecting the homeowner if the builder dies, disappears or becomes insolvent. The scheme name, threshold, limits and periods differ in every state, and Tasmania relies on statutory warranties rather than a mandatory insurance product. General information, not insurance advice. Builders warranty insurance reference. See also: Last-resort cover, Open Job Value.

Last-resort cover

Last-resort cover is warranty insurance that responds only when the builder can no longer be pursued, typically death, disappearance or insolvency, rather than whenever defective work occurs. Most Australian home warranty schemes are last-resort, with Queensland operating closer to a first-resort model. General information, not insurance advice. Home warranty insurance guide.

Open Job Value(OJV)

Open Job Value is the maximum total contract value of residential building work a licensed builder is permitted to have under construction at any one time. It is set by home-warranty insurers from a builder’s financial position, not their building capacity. Open Job Value guide. See also: Adjusted Net Tangible Assets, Open Job Number.

Open Job Number(OJN)

Open Job Number is the maximum count of incomplete jobs a builder may have at any one time under a home warranty eligibility assessment, the companion limit to Open Job Value. Together they operate as a hard cap on how much work can be under construction at once. General information; details are per the current scheme rules. NSW HBCF eligibility guide. See also: Open Job Value.

Adjusted Net Tangible Assets(ANTA)

Adjusted Net Tangible Assets is the genuine equity in a building business after intangibles and certain related-party balances are removed and the remainder is weighted toward a fire-sale recovery position. It is the core financial measure home-warranty underwriters use to set a builder’s Open Job Value. Open Job Value guide. See also: Open Job Value.

Assumed turnover

Assumed turnover is the annual turnover a home warranty underwriter derives from a builder’s open job limits as if they were fully used over a year, the figure ANTA is then assessed against. It is an underwriting construct, not the builder’s actual revenue. General information; details are per the current scheme rules. NSW HBCF eligibility guide. See also: Adjusted Net Tangible Assets.

Certificate of Eligibility(COE)

A Certificate of Eligibility is icare’s standing assessment that a building business may purchase home building compensation cover in NSW, recording its permitted open job limits and maximum contract price per construction type. It is not itself insurance; each job over the threshold still needs its own certificate of insurance before work starts or money is taken. General information; confirm current rules with the scheme. NSW HBCF eligibility guide. See also: Certificate of insurance.

Certificate of insurance(COI)

A certificate of insurance is the per-job home warranty insurance certificate a builder must obtain before starting work or taking money on a job above the scheme threshold. It is issued under the builder’s standing eligibility and is the document the homeowner actually holds. General information; confirm current rules with the scheme. NSW HBCF eligibility guide. See also: Certificate of Eligibility.

Home Building Compensation Fund(HBCF)

The Home Building Compensation Fund is the New South Wales home-warranty insurance scheme, administered by icare. Cover is generally required for residential building work over $20,000 and protects the homeowner if the builder dies, disappears or becomes insolvent. General information; confirm current rules with the scheme. Home warranty insurance guide. See also: Builders warranty insurance.

Domestic Building Insurance(DBI)

Domestic Building Insurance is the Victorian home-warranty scheme, issued by the Building and Plumbing Commission. It is last-resort cover that responds if the builder dies, disappears, becomes insolvent or fails to comply with a tribunal or court order. General information; confirm current rules with the scheme. Victorian DBI guide. See also: Builders warranty insurance.

Queensland Home Warranty Scheme(QHWS)

The Queensland Home Warranty Scheme is a statutory home-warranty insurance scheme administered by the QBCC, covering residential construction work valued over $3,300. It operates closer to a first-resort scheme than the last-resort schemes in other states. General information; confirm current rules with the scheme. Queensland home warranty guide. See also: QBCC.

Queensland Building and Construction Commission(QBCC)

The Queensland Building and Construction Commission is Queensland’s building industry regulator, licensing contractors and administering the Queensland Home Warranty Scheme as its statutory insurer. General information; confirm current rules with the regulator. Queensland home warranty guide. See also: Queensland Home Warranty Scheme.

Building Indemnity Insurance(BII)

Building Indemnity Insurance is the South Australian builder-warranty scheme under the Building Work Contractors Act 1995, compulsory for major domestic building work with a contract value of $12,000 or more. General information; confirm current rules with the scheme. SA Building Indemnity Insurance guide. See also: Builders warranty insurance.

Home Indemnity Insurance(HII)

Home Indemnity Insurance is the Western Australian builder-warranty scheme under the Home Building Contracts Act 1991, required for residential building work valued over $20,000. General information; confirm current rules with the scheme. WA Home Indemnity Insurance guide. See also: Builders warranty insurance.

Residential building insurance (ACT)

The ACT requires a residential building insurance policy or fidelity fund certificate for residential building work over $12,000, alongside the statutory warranties that apply under the Building Act 2004 (ACT). General information; confirm current thresholds and rules with the current ACT source. ACT home warranty guide. See also: Builders warranty insurance.

Fidelity Fund Certificate (NT)

The Fidelity Fund Certificate is the Northern Territory’s mandatory residential building consumer protection, delivered through a fidelity fund rather than a conventional insurance policy but working like home warranty insurance in other states, with non-completion and defect cover subject to caps. General information; confirm current rules with the current NT source. NT Fidelity Fund Certificate guide. See also: Builders warranty insurance.

Contract works insurance

Contract works insurance covers the building work itself while it is under construction, physical loss or damage to the works from events such as fire, storm and theft. It protects the build in progress, where home warranty insurance protects the homeowner after the builder fails, two entirely different covers. General information, not insurance advice. Construction insurance reference. See also: Public liability insurance.

Public liability insurance

Public liability insurance covers a builder’s legal liability for injury to third parties or damage to their property arising from the building work. It is commercially essential on every site and frequently required by contracts and licences. General information, not insurance advice. Construction insurance reference.

Professional indemnity insurance(PI)

Professional indemnity insurance covers liability arising from professional services such as design, certification or advice, relevant to builders who carry design responsibility, including design and construct work. General information, not insurance advice. Construction insurance reference. See also: Design and construct contract.

Plant and equipment insurance

Plant and equipment insurance covers a builder’s owned and hired machinery, tools and equipment against loss, damage and theft, on site and in transit. General information, not insurance advice. Construction insurance reference.

Certificate of currency

A certificate of currency is a document from an insurer confirming that a policy is in force, its cover and its dates. Builders commonly require a subcontractor’s certificate of currency for public liability and workers compensation before letting them start, so the cover behind the work is verified rather than assumed. General information, not insurance advice. Construction insurance reference. See also: Public liability insurance.

Insurance excess

An excess is the amount the insured pays toward a claim before the insurer pays the rest. A higher excess usually lowers the premium and raises what the builder carries on each claim, which is a deliberate trade-off rather than a detail. General information, not insurance advice. Construction insurance reference. See also: Insurance premium.

Insurance premium

A premium is the amount paid to hold an insurance policy, set by the insurer from the risk, the cover, the excess and the sum insured. On building work premiums are a real cost of doing business, and they belong in overheads and in the pricing of a job rather than as an afterthought. General information, not insurance advice. Construction insurance reference. See also: Insurance excess.

Sum insured

The sum insured is the maximum an insurer will pay under a policy. On contract works cover it needs to reflect the full cost to rebuild the works, because a sum insured set too low leaves the builder to fund the shortfall after a loss. General information, not insurance advice. Construction insurance reference. See also: Contract works insurance.

Underwriter

An underwriter is the party that assesses a risk and decides the terms on which it will be insured, including the premium and conditions. In home warranty schemes the underwriter also sets a builder’s eligibility limits from its financial position, which is why underwriting is a business constraint as much as an insurance one. General information, not insurance advice. Open Job Value guide. See also: Open Job Value.

Insurance broker

An insurance broker is an intermediary who arranges cover on behalf of the insured, advising on what is needed and placing it with insurers. Many builders arrange home warranty and their commercial covers through a broker, and the broker acts for the builder rather than the insurer. General information, not insurance advice. Construction insurance reference.

Duty of disclosure

The duty of disclosure is the insured’s obligation to tell the insurer the things that matter to its decision to insure and on what terms. Getting it wrong can let an insurer reduce or refuse a claim, which is why accuracy on a proposal is not a formality. General information, not insurance advice. Construction insurance reference.

Subrogation

Subrogation is an insurer’s right, after paying a claim, to step into the insured’s shoes and pursue whoever caused the loss to recover what it paid. It is why an insurer may chase a negligent trade after settling a claim, and why fault and records still matter once a policy has responded. General information, not insurance advice. Construction insurance reference.

Income protection insurance

Income protection insurance pays a portion of a person’s income if illness or injury stops them working. For a builder or subcontractor whose business depends on their own ability to work, it covers a risk that public liability and contract works do not. General information, not insurance or financial advice. Construction insurance reference.

Management liability insurance

Management liability insurance covers a range of risks that come with running a company, such as claims against directors, employment disputes and some statutory liabilities. It is a business cover distinct from the site-based construction policies, and what it includes varies by policy. General information, not insurance advice. Construction insurance reference.

Run-off cover

Run-off cover continues a claims-made policy, such as professional indemnity, for claims arising from past work after the business stops trading or stops the activity. It matters where liability can surface years later, because without it there may be no policy in place when a claim finally arrives. General information, not insurance advice. Construction insurance reference. See also: Professional indemnity insurance.

Tasmania home warranty position

Tasmania does not run a compulsory home warranty insurance product like the other states, relying instead on the statutory warranties and other consumer protections in its building laws. It is the main exception to the state-by-state warranty insurance schemes, and the current position should be confirmed with the relevant Tasmanian authority. General information, not insurance advice. Tasmania home warranty guide. See also: Statutory warranties.