Owner Builder Insurance Explained: What You Need Before You Build

When you become an owner builder, the risk that a licensed builder would normally carry lands on you. If materials are stolen from site, a storm damages the half-built frame, or a visitor is injured on your property, it is your insurance that has to respond. Standard home and contents policies usually exclude building work, so you need to arrange owner builder insurance before construction starts.

Public liability insurance: the non-negotiable

Public liability insurance covers you if someone is injured or their property is damaged because of your building work. A delivery driver trips over your materials stack, or a storm sends your scaffolding into a neighbour’s carport: public liability is what stands between you and a very expensive claim. Most councils, and many permit authorities, expect you to hold it, and most insurers offer cover from $5 million to $20 million. As an owner builder you should treat it as mandatory.

Contract works insurance

Contract works (also called construction works or builders’ risk) insurance covers the structure you are building and the materials on site. If fire, storm, theft or vandalism damages the incomplete build, this policy pays for the loss. The insurer needs to know the project value, the construction type and the build timeline. Once the home reaches completion and you move in, this cover transitions to a normal home and contents policy.

Renovating? Check your existing cover

Renovations create a coverage gap that catches many owner builders out. Tell your existing home insurer before work begins: most policies restrict or exclude cover during structural alterations, and some require the works to be declared. An owner builder renovation policy can bridge the gap, covering both the existing home and the new work.

What about the trades you engage?

Every licensed trade you engage should have their own public liability and, where applicable, workers compensation. Ask for certificates of currency before they start, and keep them with your project records. If you employ people directly, check your state’s workers compensation requirements, because the obligations for an employer are different from those for a household engaging contractors.

Does it differ between NSW, QLD and WA?

The core cover is the same in every state: public liability plus contract works. What differs is what your permit authority and council ask you to demonstrate:

• NSW: NSW Fair Trading requires evidence of insurance for your work. Owner builders also have specific warranty and disclosure obligations if the property is sold within a set period after the work.
• QLD: the QBCC framework sets out restrictions and disclosure requirements for owner builders, including limits on selling within the permit period.
• WA: Building and Energy requires an owner-builder approval, and insurers will typically want to see it before issuing contract works cover.

Because the rules are updated regularly, confirm the current requirements with your permit authority when you apply.

How much does owner builder insurance cost?

Premiums depend on the project value, the construction type, site security and your rebuild costs. Owner builder policies generally cost more than a builder’s policy for the same project because insurers price in the higher claims risk on self-managed builds. Reducing that risk is the best way to keep the premium down: a secure, tidy, well-signed site with licensed trades and documented safety procedures presents far less risk than an open site with casual labour.

Get covered before work starts, not after

Insurance cannot be backdated, and the most common owner builder mistake is arranging cover after site works begin. Put your policy in place before the first delivery arrives, then review it at each major stage of the build.

The Owner Builder Centre can arrange owner builder insurance for NSW, QLD and WA projects. Get an owner builder insurance quote or call 1300 730 752.