What Is Included In A Builders Warranty?

Building a home is one of the most important decisions and investments in anyone’s life.

The trouble is that not every builder is created equal, and the home you get as the end-product might not be up to the mark. Structural defects, inferior building materials and slipshod workmanship can contribute to a lengthy default list.

It’s not the end of the world, though; you have options and are protected by Fair Trading Australia. As long as you’re using a licensed builder within the state of construction, you will be covered by some warranty. To ensure that homeowners are provided with the necessary protection for getting their homes built, all Australian states and territories have a Builders Warranty.

However, often, homeowners are left confused regarding what’s included under warranty and what isn’t. To ensure you don’t have issues, today we’re going to give you the complete lowdown on how a Builders Warranty works.

You must ask your builder the right questions before undergoing any construction on your home.

Builders Warranty Basics

What Builders Warranty Means

Builders Warranty is a form of insurance cover that protects the homeowner against faulty, incomplete, or sub-par construction. According to the laws governing homeowner rights in Australia, a house must be suitable for inhabiting at the end of the building.

However, that’s not the only criteria that need to be fulfilled. At the same time, every facet of the construction must be exactly according to the homeowner’s specifications. Otherwise, the builder can repair and make the changes at no cost to the homeowner.

When it's not viable or possible for the builder to carry the burden of this cost, the Builders Warranty insurance kicks in, it’s essentially a form of insurance that helps cover expenses on behalf of the homeowner if the builder is unable to bear the same.

Situations, where this form of insurance is applicable can range from bankruptcy cases on the builder’s part to sudden death or unforeseen natural disasters. On these occasions, the insurance providers bear the costs of building completion and repair.

In general, the insurance covers costs that include repairing structural defects in the building. The maximum amount that a homeowner is insured for depends on the insurer. The warranty for structural defects extends for six years after building completion.

If the defects found are non-structural, the warranty cover extends for up to two years after building completion. Appliance warranties could extend past this period, such as a 10-year warranty on a fridge or washer.

What Builders Warranty Covers

While the exact details of the cover will vary from state to state, in general, Builders Warranty can take several reimbursement forms. This ranges from any extra expense required to take care of non-structural defects to reimbursement of deposits made in case construction fails to start.

Again, there may be situations where the builder cannot complete the project and leaves it halfway or partially complete. In such situations (for example, sudden death or disappearance of the builder), the homeowner is provided with the funds needed to complete construction.

Often, homeowners and builders alike are confused regarding whether Builders Warranty insurance is compulsory or not. The short answer is: yes, it is mandatory across Australia, but the specifics vary from region to region.

For example, in the case of the Northern Territories, any contract of 12,000AUD and above requires Builders Warranty insurance. In New South Wales, the amount changes to 20,000AUD, while Tasmania doesn’t have a Builders Warranty scheme required by law.

How To Get Builders Warranty Insurance

It is not the homeowner’s responsibility to take out the builder’s insurance; the builder is responsible for doing so.

In fact, without the Builders Warranty insurance, the construction work itself cannot commence. This is because proof of the insurance must be submitted to the local council for approval of the project.

That’s why, before signing the contract for the project, the homeowner must make sure to get a copy of the Builders Warranty certificate with details of the project contract. This certificate is vital in case a claim needs to be made.

The Process Of Making A Claim

We’ve already mentioned the instances when you’ll be required to claim the Builders Warranty insurance. You’ll need to collect all the required documentation regarding your building project to make a claim.

This includes the building contract, proof that you’ve made all payments to the builder, and also the insurance certificate that the builder provided you with. Also necessary are the construction plans and other structural details of the project.

Once these have been collected, you’re required to complete a form, which is the formal declaration that you’re making a claim. This form, together with the documents mentioned above and details about the builder, needs to be sent to the policy provider.

If you’re selling your home within the coverage period, the existing insurance should be passed on to the new owner.

Final Words

Builders Warranty insurance is an adequate safeguard against any unforeseen situation during and after the building process. It essentially provides a shield that ensures that the homeowner is not left in the lurch.

We hope going through the above has given you a clearer idea about what insurance covers, how it works, and what benefits you can get from it. However, the specifics will change depending on your project and region of construction.

It’s strongly advised to check the builder’s tradesperson license before commencing construction. Buildrite Sydney handles everything for you, from providing our license forms insurance certificates to ensuring the quality of our constructions.

Here are some tips on finding the right builder for you; it covers everything mentioned above and everything else you’ll need to know.