Questions & Answers
This information is specific to QBE Builders' Warranty insurance policies. If you have a more general question about your insurance, please click here >>.
Residential Builders' Warranty insurance
Q. Who requires Residential Builders' Warranty insurance?
A. It is the responsibility of the building contractor to obtain Builders' Warranty insurance where the residential building work is valued at over $12,000. The cover must be obtained before commencing work under any contract for residential building work with a consumer and before taking any money on the building contract. Kit home suppliers are also required to take out Builders' Warranty insurance. A certificate of insurance must be given to the customer before the supply of the kit home, and before taking any money on the supply contract. No contractor, developer, owner-builder or kit home supplier is entitled to receive any payment, including a deposit, until insurance is in place and a certificate of that insurance has been given to the customer.
Q. What does Warranty insurance cover?
A. The Residential Builders' Warranty Policy covers loss or damage resulting from non-completion of the work, loss of deposit or breach of statutory warranty if you cannot recover compensation from the builder because of the following situations: Death of the Builder, Disappearance of the Builder or Insolvency of the Builder.
Q. Why do I require Warranty insurance?
A. It is a legislative requirement for all builders in regard to residential projects above $12,000.
Legislation requirements
Q. How does a builder obtain a building licence without insurance?
A. A Builder may apply for a restricted licence without insurance. Once you are eligible for Residential Builders' Warranty insurance, you will be provided with a letter of eligibility that you can use to have the restriction lifted.
Q. Can a builder apply for insurance as an individual if a company is used for trading and tax purposes?
A. Only a builder eligible for Builders' Warranty insurance cover can enter into a residential building contract with an owner. Therefore it is important to apply for eligibility in the name of the party that signs the contracts with owners. If the income for the project will appear in your company financials you will need to enter into a contract with the owner under your company name and therefore you will need to be licensed as a company.
Assessment process
Q. What information is required to undertake a Warranty insurance assessment?
A. A builder must be licensed (or apply for) in the state in which they operate. They need to complete and sign the application form and provide up-to-date financials to demonstrate their financial capacity. We also require a statement of assets and liabilities for company directors along with various other information as detailed by your broker and contained in the relevant checklist included in our application form.
Q. What financial requirements apply for the turnover requested?
A. QBE generally requires a net tangible worth position between 5% and 10% of the annual turnover limit sought as a minimum, depending on other factors such as time in the industry, general trading performance and claims history.
Q. What happens if my business does not satisfy the necessary turnover requirements?
A. QBE notifies the broker in writing of the builder’s situation and possible ways for the builder to suitably meet our requirements.
Q. How is the approval decision communicated?
A. We individually assess each application on receipt of relevant information. Your broker will be contacted with the decision.
Eligibility
Q. What does the builder obtain from QBE once Builders' Warranty insurance is granted?
A. QBE will provide the builder with a Certificate of Eligibility which shows Turnover approved for 12 months, current category rating (A,B or C which defines premium to be paid) and maximum individual limits (Single Dwellings, Alterations & Additions, etc).
Q. How do I obtain individual project certificates?
A. An application form must be completed and submitted via the insurance broker for each individual project being undertaken by the builder. When received, the broker processes the certificate request, using the QBE on-line system, for the builder.
Q. Why do builders on similar projects pay different premiums?
A. Builders are rated in categories according to a range of factors such as time in business, trading history, net tangible worth and claims history. Therefore, depending upon the builder's category rating (A, B or C), variations in premiums may occur.
Q. Can I reduce my premiums?
A. Premiums are subject to review by Insurers on the provision of information that changes the risk profile of the builder. A positive improvement in the trading performance of the business, trading profits, net tangible worth or any combination of the above may result in an improved builder category rating.
Q. What is an annual limit?
A. An annual limit is an amount set by the insurer (at the builder's request) that the builder may undertake over the duration of the policy (12 months).
Q. How often is a builder reassessed?
A. All builders will require re-assessment once a year on renewal. However, in some instances, reassessment may be triggered at more frequent intervals. For example, excessive turnover growth, dishonoured cheques, adverse information, etc.
Security
Q. Does QBE require Bank Guarantees to support my annual cover?
A. No. QBE will not seek Bank Guarantee security to support the annual cover of a builder.
Q. Will I be required to sign a Deed of Indemnity?
A. QBE will only seek a Deed of Indemnity from the directors of a company or related entity in instances where the company would otherwise not meet prudential requirements.