Key points

• Builders and renovators in Australia are coming up against challenges caused by trade shortages, rising costs and supply chain delays.
• These delays mean builders may exceed their maximum project duration, and risk being inadequately covered.
• We’ve summarised important information for builders and renovators in Australia, including cover options and pitfalls to avoid.

Challenges for builders and renovators

The construction industry in Australia is facing a number of challenges right now, including trade shortages, supply chain delays and escalating costs. On top of this, we’re seeing major issues caused by weather related events, such as flooding over East.

These factors have a significant impact on fixed-price contracts and can result in builders exceeding maximum project durations. Unfortunately, more and more home builders and renovators are being caught out by construction taking over the estimated time period.

Why your construction period matters

When it comes to securing cover for a build, the maximum project duration refers to the longest period allowed for construction of a project, as specified in an insurance policy. This construction period matters because it determines when your build is covered by insurance.

If a construction project exceeds the maximum duration stated in a policy, there may be coverage implications, including exclusions or limits on claims. Unfortunately, many builders do not realise they’re outside the scope of their construction period until they need to make a claim and discover they are not adequately covered.

This is why it is critical for builders to know what their max project duration is, and to ensure they are continually covered through the construction process.

Are you actually covered for your reno?

Many renovators do not realise that cover for an existing structure is not automatically included in most policies, as it exists as a separate sub-limit. This means that anyone renovating will need to specifically request cover for renovation of an existing structure.

In some cases, an existing structure is covered as an extension under the builder’s contract works policy. It’s important to find out if this is the case before construction starts. Renovators can also take out their own single project policy before work begins, then reinstate home insurance once the renovation is at practical completion.

What kind of cover is available for contract works?

There are a number of insurance products on the market that cover home owners, builders and construction companies conducting contract works. These include:*

• Run off cover: For projects that begin during the policy period. If the policy is not renewed, then the project is still covered until it is completed, or it exceeds the parameters of the policy. This is one of the most popular choices for builders.
• Turnover/ Transfer: Often chosen by larger builders and construction companies who need a policy that covers turnover received from project work completed during the period. However, cover for projects started during a period cease when the policy expires, and a new policy is required.
• Individual declaration: This is similar to Runoff cover; however projects must be declared before commencement. A deposit premium is collected when the policy begins. If there is no declaration cover does not exist. Ideal for builders undertaking multiple large projects during a period.
• Single: Often chosen by owner builders or builders constructing a large, one-off project. This policy covers a single project and ceases when the period of insurance and any Defects Liability Period (DLP) is complete.

 Need support with finding the right cover?

Finding the right cover for your build or reno will depend on the scope of your project. A good insurance broker will connect you with a product that matches your requirements, and your budget. We recommend discussing your needs and potential changes to your build with one of our brokers before construction begins to ensure you are comprehensively covered. We can also support you by regularly reviewing your original project duration and extending coverage to ensure you’re not caught out by gaps in your cover.

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* The products listed are just an overview. Please contact us for more detailed information on available insurance policies for contract works.