I need Public Liability Insurance as Owner Builder But How Much do I need?

October 24, 2018 3:01 pm Published by 5 Comments

Owner builders are particularly vulnerable when it comes to third party injury or damage because one overarching characteristic; owner builders hold property in their personal name(s). Public liability insurance is to firstly protect an owner builder against legal costs of responding to, or legally defending a claim of negligence, injury or property damage to other parties. The overwhelming risk where property ownership is so clear-cut, is it draws the ‘big end of town’ such as lawyers acting for medical and health insurers, compensation boards, and even other insurance companies to chase recovery of costs or compensation from ‘asset rich’ owner builders.

By way of completing this important argument, without any exceptions, everybody working or participating in the construction or renovations and working on an owner builder project ‘hides’ behind a company structure; whether sub-contractors, sole traders, employees, delivery personnel or supplies, certifiers and inspectors. This leaves a property owner, an owner builder fully exposed.

Residential construction sites are dangerous work places and with comings and goings of trades and sub-contractors, suppliers and other construction services personnel, 3rd party liability insurance is a must.

Standard residential construction public liability value is $5million. There may be a special requirements to increase limit of liability to $10million or $20million, and these special considerations are pre-conditional to a building permit or DA being released. An increase to insurance cover is set by certifiers or local government pertaining to environmental protection requirements, or heritage considerations or civil infrastructure risks.

A general, and forms part of industry convention, licence or registered builders carry $10million public liability, because firstly they are incorporated, and often embrace employees such as partners and spouses and apprentices. Secondly, over a 12 month period of insurance they may undertake several projects, many running simultaneously, increasing their exposure, thus $10million limits is preferred. $20 million Public Liability applies when public or government assets are at risk, or union work-site perquisite.

Amateur and inept brokers may still embrace a general concept of higher the insurance value, the higher the premium, and greater their personal commission. Then there are those uneducated spruikers who argue ‘it costs no more to have a higher value’, but in reality insurance companies make money, so someone is paying, and this means either reduce the benefits of the policy or reduce the sales commissions. Given, sales commissions are ‘never’ reduced as evident by the current (2018) Banking and Insurance Royal Commission!
Qtrust is all owner builder and all advice driven insurance. Therefore, owner builders will be satisfied that public liability cover is all about protecting their family assets and home.

Key attributes of the best-selling owner building public liability is as follows:
1. Sub-contractor actions. Sub-contractor injury. Worker to worker injury cover
2. Neighbouring property, council property damage. Damage to gutters, roadways and other public assets
3. Claims assessment and investigation costs cover
4. Legal costs and taxes, when part of the claim are included in this cover
5. After-loss care provisions
5. Care, custody and control of construction infrastructure

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This post was written by Technical Underwriting Centre

5 Comments

  • abe collins says:

    yes, this is how it should be done – honestly!

  • simonetta carlos says:

    Just say it like it is brazen

  • ian rose says:

    our builder said we need 10m. so whats his insurance cover, or is he trying to get me to cover it, so he reduces his insurance costs?

    • scott_s says:

      Scott, the matter of unqualified advice when an individual/persons financial position is front and centre such as insurance, is a continuing concern in Australia. A builder or sub-contractor is just not qualified to comment on insurance matters. The thought that because they hold a nail gun (up-grade from ‘hammers’!), they are qualified in all things construction. This is like arguing ‘because I drive a car it makes me an expert in all things under the bonnet!

      A builders insurance opinion is similar to real estate property managers recommending landlord insurance, when in fact they commercially benefit for each sale and without any accountability and, without any disclosure as to accuracy or appropriateness of advice they willing provide. A registered builders insurance requirements are vastly different from an owner builder for the very reasons mentioned in our comments above. In our view an owner builder should remain focused on protecting their financial and legal position and not others who are not at risk.

  • demetrius x says:

    makes sense.

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