Home building insurance is a broad phrase people often use to describe insurance for a home or actual building work being done. Let’s take a closer look:
What home building insurance typically covers
1) Building insurance (for an existing home you already own)
Building insurance usually covers the physical structure and fixed items covering damage from insured events such as fire, storms, or vandalism. It may include areas of the home such as:
- walls, roof, slab, framing
- built-in cabinetry and other permanent fixtures
Common exclusions
Keep in mind that exclusions will vary per insurer.
- wear and tear and lack of maintenance
- defects or poor workmanship as a “fault” (this is usually handled under contract terms, statutory warranties, and dispute processes rather than a standard building policy)
- contents (unless you have contents cover as well)
Best practice in WA: If you already own a home and you’re renovating/extending, keep your own building policy active and tell your insurer about the works. Many policies require notification, and some apply conditions while construction is underway.
2) Construction-period cover
This type of insurance is often called contract works or construction works insurance. It’s designed for the build phase and commonly responds to accidental loss or damage to the works while under construction, and sometimes materials on site. Examples include:
- storm damage to partially completed work
- theft of some materials (often subject to security requirements)
- accidental damage during construction (subject to exclusions and excess)
3) Public liability (builder-held)
Public liability insurance generally responds if a third party suffers injury or property damage arising from building activities.
Example scenarios:
- a visitor trips at the site and is injured
- accidental damage to a neighbor’s property linked to the works
4) Workers’ compensation (builder-held, where required)
In WA, workers’ compensation arrangements depend on employment relationships and how contractors are engaged. In general terms, it covers workers for work-related injury/illness and is a key compliance requirement for construction businesses.
Because arrangements can differ between employees, labour hire, and subcontracting structures, builders typically manage this as part of their operational compliance.
5) Statutory home warranty / indemnity style cover
Where this type of policy applies, it’s generally designed to protect the homeowner in specific situations. One example is when the builder can’t complete or meet obligations due to defined events such as insolvency. It is not the same as storm/fire building insurance, and it’s not a blanket cover for every defect regardless of circumstances.
Instead, it is generally designed as a consumer safety net that may respond in specific circumstances, most commonly where the builder cannot meet obligations due to defined events (for example, insolvency, death, or disappearance.
What is the difference between home insurance and building insurance
Building insurance usually refers to the structure such as the building itself and fixed fixtures.
Home insurance is often used as a general term and may mean:
- building insurance only, or
- a packaged policy that includes building plus contents
A simple way to explain it:
- building insurance: what you can’t pick up and take with you
- contents insurance: what you could take with you if you moved
- home insurance: sometimes a bundle of building + contents
How much is home building insurance
There’s no single set price. The cost depends on the type of cover, insurer, risk profile, and various other factors.
What affects the cost of construction-period cover / builder insurances
Common pricing factors include:
- contract value and build type
- scope (new build vs renovation/extension)
- project duration
- site conditions (access constraints, proximity to neighbors)
- insurer terms, exclusions, and required risk controls
Who pays for building insurance?
With most residential or custom home builds, it helps to separate responsibility to understand who pays for what.
Responsibility
- The builder typically arranges and maintains the construction-related insurances required to operate and carry out the works. As mentioned before, this can include insurance for public liability, worker compensation, and appropriate construction-period cover.
- The homeowner typically maintains insurance on their existing property and contents.
If the builder arranges the cover, the cost is commonly included in the contract price or the total cost of the build.
How insurance works when building a home with IQ Construction
When you build with IQ Construction, we maintain the insurances required to operate and carry out building works, including appropriate construction-period and liability coverage for our projects. This helps protect the build while it’s underway and ensures we’re meeting our obligations as a professional builder in Western Australia.
What you should do as the homeowner:
- If you’re building on a vacant block, you can speak with your insurer about when you need to commence building/contents cover.
- If you’re renovating or extending an existing home, keep your existing building and contents insurance active and notify your insurer about the planned works.
If you’d like, we can also explain, in general, what insurances are in place on your project and what your insurer may need from you before construction starts.
Simply give us a call and we can book a meeting – (08) 9399 6715