New South Wales Consolidated Acts

HOME BUILDING ACT 1989 - SECT 99

99 Requirements for insurance for residential building work done under contract

(1) A contract of insurance in relation to residential building work required by section 92 must insure--

(a) a person on whose behalf the work is being done against the risk of loss resulting from non-completion of the work because of the insolvency, death or disappearance of the contractor, and

(b) a person on whose behalf the work is being done and the person's successors in title against the risk of being unable, because of the insolvency, death or disappearance of the contractor--

(i) to have the contractor rectify a breach of a statutory warranty in respect of the work, or

(ii) to recover compensation from the contractor for any such breach.

(2) Subsection (1) does not require the following to be insured--

(a) a developer on whose behalf residential building work is being done,

(b) any other person belonging to a class of persons prescribed by the regulations for the purposes of this section.

(2A) A provision of a contract of insurance providing cover for the benefit of a person on whose behalf work is done on land is to be read as providing (and to have always provided) for the same benefit in relation to a non-contracting owner of the land.

(2B) Subsection (2A) applies irrespective of whether or not the contract of insurance concerned contains a term to the same effect as that subsection.

(3) If a partnership contracts to do residential building work, the insolvency of any of the partners constitutes the insolvency of the contractor for the purposes of a contract of insurance required by section 92 in relation to the work. The contract of insurance must include provision to that effect.

(4) Despite any other provision of this section, a contract of insurance in relation to residential building work required by section 92 may consist of 2 separate contracts of insurance if--

(a) one contract (a
"construction period insurance contract" ) insures against--

(i) the risk specified in subsection (1)(a), and

(ii) the risk specified in subsection (1)(b) in a case of non-completion of the residential building work, and

(b) the other contract (a
"warranty period insurance contract" ) insures against the risk specified in subsection (1)(b).

(5) A warranty period insurance contract is not required to, but may, cover loss that arises from a breach of a statutory warranty in a case of non-completion of residential building work.

(6) A licensed insurer is not required to, but may, provide both a construction period insurance contract and a warranty period insurance contract in relation to the same residential building work.

(7) Nothing in this section requires a person obtaining insurance for the purposes of section 92, and who obtains insurance for that purpose by entering into 2 contracts of insurance as specified by this section, to enter into both the construction period insurance contract and the warranty period insurance contract with the same licensed insurer.