Part 3 This is the final part of our series explaining what you (Owner Builder) need to understand, read carefully the Product Disclosure Statement (PDS) compare and assess policies based on the standard of cover that will protect you and your family in the event of a claim.
Under Insurance, escalation and increased cost of working – terms that need to be understood to ensure you are covered.
What is Under Insurance?
That is where you undervalue the build cost of your project that in the event of a claim, you only receive a lot smaller percentage of the replacement cost.
What is escalation?
In the event of a claim, the Insurer allows for an increased cost of works percentage. However if your project value has increased more than the Insurers escalation allowance, you are underinsuring, and you should contact your insurer to increase the project value to avoid any under Insurance issues.
Increased cost of Working (ICOW)
So if an Owner Builder in the event of a claim, an Owner Builder has to incur any additional costs pending full repair. E.g. Site security plant, temp hoardings. Are they covered by the policy? A lot of new and inexperienced broking companies confuse Increased cost of working and escalation allowances and do not offer Increased cost of working.
Check, Check, Check!
What is worker to worker cover?
And why do Owner Builders need it? When one tradie injures another on your site, will the policy protect you (Owner Builder) from a claim? Normally this would be claimed under Workcover, but if the injured tradie takes legal action against the Owner Builder for being in breach of their duty of care (Unsafe worksite) will the policy protect you (Owner Builder)?
Check, Check, Check.
Odds and Sods
• Is the policy extendable? At least 1/3 of Owner Builders take more than 12 months to complete their project.
• Are my appliances covered? As Owner Builders store products and materials for use as the project progresses on and off site.
• Are you paying for benefits that relate to Builders and cannot be claimed by an Owner Builder? If the Product Disclosure Statement mentions dewatering, maintenance, employee’s, then it is a builder’s policy and you are paying for these inclusions.
• What depth can I excavate before requiring extra Underwriting approval? Most policies have a limit of 1.5m excavations. So, if you are excavating deeper, find a policy that you will not pay extra for, the deeper you dig.
• Who are the Insurers? Experience in Construction and Public Liability is mandatory, you would not expect a pharmacy Insurer to Underwrite Owner Builder Insurance, so therefore Check!
Buildsafe Insurers Lloyds, QBE and Liberty Mutual are some of the worlds leading Insurers and providers of Construction and Public Liability.
What better insurers to protect your project and yourself than QBE, Australia’s leading international insurer, Liberty Mutual, since 1912 Liability is their area of expertise, with Lloyds of London, you have the choice of the oldest most recognised insurance provider in the world.
We hope these reports have been helpful in your accessing and comparing Owner Builder and Construction and Public Liability policies.
Price will be long forgotten in the event of a claim that a policy bought on price only, does NOT cover.
Make your life simple, ask the questions “Is … Included in the policy” Yes or No. Otherwise you will always be unsure, and a building site is a dangerous place for crime and Injuries.
Good Luck and Thank you for your support!
• Escalation – Up to 15% allowance, covered.
• Increased Cost of working – up to 10% allowance, covered.
• Worker to Worker – Covered
• Extendable – Up to 24 months.
• Appliances – Covered.
• Excavation – Up to 5m depth.