You are required to pay a premium if you are a licensed contractor carrying out insurable work of more than $3300.00 in value. You must pay the premium as soon as practicable after the contract has been entered into (it is a requirement under legislation that you pay the appropriate premium prior to commencement of the construction or you may be fined). A premium should also be paid for speculative residential construction (spec homes) prior to commencement of construction.
The only exceptions are licensees working as sub-contractors for a principal contractor or where the owner holds an owner builder permit for the relevant construction.
The scheme provides consumers (conditions apply) with protection where:
A licensed contractor does not complete the contracted residential construction work
There is defective work
The building suffers from subsidence or settlement
What is insurable work?
BSA's Insurable Residential Construction Work Fact Book provides information on what is insurable work.
How much is payable?
Once you have established that the work is insurable, where a contract exists, the premium amount is based on the price stated on the contract. This may be a different value from the total value of the work e.g. if the owner has supplied the materials outside the contract. Where no contract exists, the premium is calculated on the total value of the work.
The Insurance Premium Table (for contracts signed after 1 July 2011) should be used to work out the amount owing. To calculate the insurance premium for contracts signed before 1 July 2011, you will need to consult the appropriate Insurance Premium Table from the selection available under "Fact Sheets" at the bottom of this page. Please note - the premium includes GST.
Please be aware that for multiple dwellings one premium is payable on each individual residence being built or affected. Divide the total contract value by the number of units to calculate the premium. A formula is outlined on page 2 of the Insurance Notification Form.
Confirmation Notice and Certificate of Insurance
When a premium is paid you will receive written notification from BSA showing the premium has been paid. A Certificate of Insurance is issued to the property owner. The certificate is conclusive evidence that the contracted works are covered by BSA's Home Warranty Insurance Scheme and contains details relevant to the contract.
Will BSA Investigate Non Payment of an Insurance Premium?
Yes - click here for more
