Cost of Insurance in Contracts

HIA Industry Update for NHS
Approx read time: 2 minutes

Amendments to the Home Building Act in January 2018 have resulted in some changes being required to NSW residential building contracts.

What are the changes?

It is now a requirement that the cost of insurance under Part 6 or Part 6B of the Act, which is home building compensation cover (known also as insurance under the Home Building Compensation Fund or Warranty Insurance) is included in the contract. This cost would generally be the premium that has been paid for the insurance.

As a result of this new requirement, the consumer checklist (found in HIA contracts and marked Attachment A) has been updated, which now includes an item 12A whereby the consumer should check off that any contract they enter into includes this cost.

When do they apply to contracts?

From 1 July 2018 all contracts that require home building compensation must show the cost of the cover in the contract.

HIA is updating its suite of contracts (revised consumer checklist and an item in the warranty insurance schedule to insert the cost of insurance) to meet this new legislative requirement.

Updating existing contracts

If you have a stock of HIA contracts, they can be amended to meet the requirements by inserting the cost of insurance somewhere within the contract, such as in the Warranty Insurance schedule (e.g. Schedule 6 of the HIA New Dwellings and Renovations and Additions Contract, Schedule 7 of the HIA Cost Plus Contract, Schedule 3 of the HIA Small Work over $20,000 contract) or adding it as special condition.

An example of wording to add to schedule or special condition is:

“Cost of insurance under Part 6 of the Home Building Act 1989 (or alternative indemnity product under Part 6B of the Home Building Act 1989) is $_________________________”.

It is also a requirement to provide the updated consumer checklist which is provided in the HIA Information Sheet. For more information, HIA members can contact HIA’s Workplace Services team on 1300 650 620 or email NSW_IR&Legal@hia.com.au.

Note: I am pleased to advise that from 1 August all three NHS stores will stock and sell a selection of key HIA contracts for HIA members and non-members to purchase. These professionally written and affordable contracts have been specially created to protect the businesses of those that operate in the home building industry.

Craig Jennion
HIA Executive Director – Hunter