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How Much Insurance Is Enough


Article on How much insurance is enough by adam

Adam Weaver adam@allrisk.com.au
10-06-2017

How much insurance is enough?

There's actually no right or wrong answer to this question - the right amount of insurance is the amount you need depends on how much financial risk you're willing to take on your project.

Common types of insurance

Owner builders typically consider insuring:
  • Damage to the project itself (e.g. theft, storm, fire) - contract works cover
  • Injury to others or damage to other property - public liability cover
  • Theft or damage to the owner-builders tools - tools, plant, and equipment cover
  • Damage to the existing structures on the block - standard or deluxe existing structures cover
  • Injury to volunteers causing their loss of income - volunteers cover
  • Injury to contractors and "deemed workers" - workers compensation
The only compulsory type of insurance is workers compensation - and whether you need a policy or not depends on which state of Australia you live. In most states, sole trader or partnership contractors (e.g. not Pty Ltd) may be "deemed workers" - since you're engaging a person (not a Pty Ltd company) to work in your "business" of being an owner-builder, and are paid for their personal exertion.
The rules in each state are a lot more complicated - we always recommend that you either arrange precautionary insurance, or speak to one of our experts, or at least talk to WorkCover in your state to assess your requirement (our experience is that you may get a different answer from WorkCover depending on which way the wind is blowing, however).

How much contract works do I need

We'd suggest insuring for enough to pay for a professional registered builder to complete the job on your behalf. You don't have to - there's no problem in only insuring for the cost you would incur in doing the work, but ask yourself if you would really want to do it again if the project is destroyed near completion?... or to come up short when paying professionals to do all the replacement works after a claim.

How much public liability do I need

Since you can't know what might go wrong, our best advice is that you should purchase the maximum amount you can comfortably afford. We'll give you options for $5 million, $10 million, and $20 million covers. Sometimes your council or your bank/lender may have a minimum requirement too. 

What about volunteers

If you personally are going to work in your project, it's reasonable to think that your friends and family are going to pitch in to help out. If you, your partner, or one of your friends or family members is hurt on the project, they can't claim workers' compensation - you're not paying them and they're not your "workers". We give you options to insure the volunteers' loss of income as a result of an injury while helping you for free on your project.

Options options options

Our quote process takes less than 2 minutes, and will instantly e-mail you a quote with many options. We try to make the process as simple as we can - next to each quote option we give you the price. Don't want one of the options presented? No problems, you don't need to take it. 
We don't hide prices and costs in all-in-one quotes where you can't see what you're paying for. We want you to make an informed choice about what cover you need on your project.

For more information about How Much Insurance Is Enough, visit our website.
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