Draft - Home Building Compensation Insurance Guidelines and Approved Form for Certificates of Insurance

Introduction

These Guidelines are published by the State Insurance Regulatory Authority (the Authority). The Authority is constituted under the State Insurance and Care Governance Act 2015 and is responsible for regulating workers compensation insurance, motor accidents compulsory third-party (CTP) insurance and home building compensation insurance in NSW.

The Guidelines are divided into the following parts:

Part 1: Guidelines for APRA-authorised insurers

Part 2: Guidelines for the NSW Self Insurance Corporation

Part 3: Glossary

Part 4: Appendices

Part 5. Form approved by the Authority for certificates of insurance

Commencement

These Guidelines, other than approved form for certificates of insurance, take effect on the date on which they are published on the NSW legislation website.

These Guidelines replace, in respect of licensed insurers, the following insurance guidelines published on legislation website on 22 December 2017:

a. Home building compensation (prudential) insurance guidelines (2017-740)
b. Home building compensation (business plan) insurance guidelines (2017-736)
c. Home building compensation (claims handling) insurance guidelines (2017-737)

and the following insurance guidelines published on legislation website on 17 December 2021:

d. Home building compensation (prudential) insurance guidelines (2017-740)
e. Home building compensation (business plan) insurance guidelines (2017-736)

The Authority approves the form set out in Part 5 for certificates of insurance for contracts of insurance entered into on and from [date] for the purposes of section 92, 96 and 96A of the Home Building Act 1989.

Guideline-making powers

These Guidelines are issued by the Authority under 103EC and 103ED of the Act.

Interpretation of the Guidelines

These guidelines should be read in conjunction with relevant provisions of the Act and the Regulation.

Applications of the guidelines

These guidelines apply to:

1. licence holders that are corporations that are authorised to carry on insurance business within the meaning of the Insurance Act 1973 of the Commonwealth (‘APRA-authorised insurers’), and
2. the NSW Self Insurance Corporation (‘SICorp’).

Part 1 - Guidelines for APRA-authorised insurers

1. Prudential standards

1.1 For the purposes of section 103EC(b) of the Act, an insurer that is authorised by APRA to carry on insurance business is taken to satisfy prudential standards.

1.2 For the purposes of section 105T of the Act, the timeframe within which an APRA- authorised insurer must notify the Authority of re-insurance matters required by that section is 10 business days.

2. Business Plan

2.1 For the purpose of section 105S(4) of the Act, a business plan is taken to be prepared in accordance with these Guidelines if the business plan:

1. has been approved by the APRA-authorised insurer’s Board,
2. has been submitted to APRA in compliance with prudential standards under the Insurance Act 1973 of the Commonwealth, and
3. includes information required under section 105S of the Act.

3. Premiums

3.1 For the purposes of section 103BD of the Act, an APRA-authorised insurer must furnish with the premiums they file with the Authority, a statement signed by an actuary appointed by the insurer in accordance with section 39 of the Insurance Act 1973 (cth) that the premiums will not be excessive or inadequate having regard to the insurer’s projected costs and expenses, and allowance for the insurer’s target rate of return.

3.2 For the purpose of section 103BE(5) of the Act, the period allowed for rejecting a premium is 8 weeks of receipt. [cf section 8.15 of the current premium guidelines]

3.3 For the purposes of section 103BF(1) of the Act, an APRA-authorised insurer must file its premiums with the Authority within 8 weeks of being granted a licence under section 105F  of the Act. [drafting note - currently every 12 months by a date determined by the Authority, unless the Authority authorises the licensed insurer to continue offering the licensed insurer’s current filed premiums]
[cf section 8.2 of the current premium guidelines]

3.4 For the purposes of section 103BF(2) of the Act, APRA-authorised insurer must file a premium or set of premiums within 10 weeks of receiving a written notice to file premiums from the Authority.

3.5 For the purpose of section 103BF(4) of the Act,  an APRA-authorised insurer is not required to pay any fee in connection with the filing of premiums.

3.6 For the purposes of section 103BE of the Act, the premium filing must include the proposed commencement date for the premiums. [cf section 8.11 of the current premium guidelines]

3.7 An APRA-authorised insurer must publish on its website any premiums filed with, and not rejected by the Authority within 10 business days of the earlier of:

1. the date on which the Authority notifies the APRA-authorised insurer in writing that the Authority does not reject the premiums; or
2. the expiry of the period allowed for rejecting a premium in clause 3.2 of Part 1 of these guidelines under section 103BE(5).

4. Eligibility

4.1 An APRA-authorised insurer must have criteria for determining whether a contractor will be eligible to enter into a contract of insurance under Part 6 of the Act.

4.2 An APRA-authorised insurer must assess whether a contractor meets the criteria before entering into a contract of insurance with the contractor.

4.3 The criteria must include that a contractor applying for eligibility is:

1. the holder of a contractor licence under the Act, or
2. is taken to be the holder of a contractor licence under the Act because the person has automatic deemed registration under Part 3A of the Mutual Recognition Act 1992 of the Commonwealth

4.4 If an APRA-authorised insurer determines that the contractor is eligible to enter into a contract of insurance, the APRA-authorised insurer must:

1. provide the contractor with a defined scope of projects for which the APRA-authorised insurer will offer insurance, and which at a minimum must include a dollar value measure of that scope, and
2. define the start date of the period of time in which a contractor is eligible to enter into contracts of insurance with the APRA-authorised insurer.

4.5 If an APRA-authorised insurer requires contractors to provide security as a condition of eligibility or as a condition of entering into contracts of insurance, the licensed insurer must keep records of the number and form and value of any such securities.

4.6 If a contractor’s eligibility to enter into contracts of insurance with an APRA-authorised insurer ceases for any reason, the APRA-authorised insurer must record the date on which the eligibility ceased.

4.7 An APRA-authorised insurer that suspends or terminates a contractor’s eligibility must inform the contractor in writing, either before the date on which the suspension or termination takes effect, or no more than 2 business days after the date that:

1. the contractor is no longer eligible to purchase insurance from the APRA-authorised insurer,
2. that it is an offence for the contractor to do, or request or receive any payment for, work that requires insurance, if the contractor has not entered into a contract of insurance for the work under section 92 or 96 of the Act, and
3. that the Authority may inform NSW Fair Trading that the contractor has ceased to be eligible to purchase insurance from the APRA-authorised insurer.

5. Claim handling

5.1 An APRA-authorised insurer must file a claims handling model with the Authority:

1. if it proposes to amend or replace its existing eligibility model, or
2. if directed by the Authority in writing, within 60 days of the date of that direction, or if a different period is specified in the direction, within the period specified in that direction.

5.2 The model must at minimum include:

1. Claims handling procedures
2. Service standards that meet these guidelines requirements and the Authority’s Customer Service Conduct Principles
3. Management and response to significant losses eg. major builder collapse
4. Information for claimants
5. Standard letter templates
6. Complaints and dispute management processes
7. Roles and responsibilities including management of third party providers (if any)
8. Quality assurance procedures. Proposed commencement date of the model [cf 10.2 of current claims handling guidelines]

5.3 The claim handling procedures must at minimum include:

1. Notification of loss
2. Notification of claim
3. Minimum information required to lodge a claim
4. Claims assessment process
5. Settlement methods
6. Internal review process
7. Claims finalisation process

5.4 An APRA-authorised insurer must not use a model that has not been accepted by the Authority. Once the Authority has accepted the claims management model, the APRA-authorised insurer must apply the claims management model from the proposed commencement date of the model without discretion. [cf section 10.7 of current claims handling guidelines]

5.5 An APRA-authorised insurer must publish its loss notification form and claim forms, claims handling procedures and claims process on its website. [cf section 5.6 of the current claim handling guidelines]

5.6 An APRA-authorised insurer must, within one business day of receiving a loss notification form, acknowledge in writing receipt of the loss notification form including:

1. in what circumstances a person is entitled to claim,
2. the time period within which a claim must be lodged, and
3. a description of the claim process and information required by the licensed insurer to assess a claim [cf section 6.12 of the current claims handling guidelines].

5.7 If an APRA-authorised insurer is aware, or becomes aware, that an insured event has occurred in respect of a contractor, the APRA-authorised insurer must within 2 business days inform in writing each person who notifies, or has notified, the insurer of loss associated with that contractor:

1. the fact that an insured event has occurred in respect of the contractor,
2. that a claim may be lodged or, if the insured event is the contractor’s deemed insolvency for failing to pay a monetary order of NCAT or the court to a different claimant, that the person may apply to NCAT or the court to obtain a compensation order that can provide a basis for the person to make an insurance claim, and
3. provide a copy of the insurer’s claim form.

5.8 On receiving a claim form from a claimant, an APRA-authorised insurer must within one business day of the receipt of a claim form, acknowledge the receipt of the claim form in writing including:

1. an explanation of steps that it will take to assess the claim,
2. the time periods and circumstances within which a licensed insurer is deemed to have accepted liability for the insurance claim under the Act or the Regulation, and
3. if the claim relates to non-completion of work, information about the support available from the insurer to mitigate the claimant’s loss, including but not limited to, temporary fencing or barrier systems that are reasonably necessary to secure the insured work. [cf section 6.12.6(a) - 6.12.6(c) of the current claims handling guidelines]

5.9 APRA-authorised insurer must within 10 business days of receiving a claim, notify the claimant in writing whether or not the APRA-authorised insurer accepts that an event in which a claim may be made has occurred or, alternatively, whether the APRA-authorised insurer requires further information. [cf section 6.12.5(a) of the current claims handling guidelines]

5.10 Within 10 business days of providing the notification required by 5.8, the APRA-authorised insurer must determine if the property will need to be inspected, and if so:

1. appoint a person to inspect the property, and
2. provide the contact details of that person to the claimant. [cf section 6.12.7 of the current claims handling guidelines]

5.11 An APRA-authorised insurer must ensure that any person inspecting a property on its behalf has a current licence, registration or qualification if required under the Act or any other applicable law. [cf section 6.12.10 of the current claims handling guidelines]

5.12 If an APRA-authorised insurer at any time forms the view that an event in which a claim may be made has not occurred, the APRA-authorised insurer must inform the claimant in writing within one business day and provide details of the source of that belief.
[cf section 6.12.5(b) of the current claims handling guidelines]

5.13 An APRA-authorised insurer’s claim handling model must include systems to monitor that residential building work arranged by the APRA-authorised insurer in connection with claims:

1. complies with the National Construction Code,
2. will be performed by a licensed contractor, and
3. will be performed at reasonable market cost.

5.14 An APRA-authorised insurer must inform the claimant about a claim decision in writing including:

1. whether the APRA-authorised insurer accepts the claim in full or part, or has reduced its liability or rejects the claim, [cf section 7.1 of the current claims handling guidelines] and
2. if the claim is not accepted in full, provide the claimant with reasons together with copies of reports, if any, that were relied upon to make that decision.
   [cf section 5.12 of the current claims handling guidelines]

5.15 If an APRA-authorised insurer forms the view that it will be unable to make a decision about a claim within the period prescribed by clause 39 of the Regulation, the APRA-authorised insurer must notify the claimant in writing at least 10 business days prior to expiry of the period:

1. the reasons for the delay,
2. request agreement from the claimant to a specified, further amount of time, and
3. offer partial settlements of the claim or interim payment, where it is clear that liability is at least as much as the amount to be paid.

5.16 When an APRA-authorised insurer makes a claim decision, it must give written notice to the claimant about the decision, including options to make a complaint or to dispute the claim decision. [cf section 7 of the current claims handling guidelines]

5.17 An APRA-authorised insurer’s complaint and dispute processes must at a minimum include:

1. frontline complaint handling to focus on early resolution,
2. the option of internal review if the claimant is not satisfied by the frontline complaint handling process, and
3. information for claimants about how to make a complaint to the Authority and that the claimant may appeal the claim decision through a court or tribunal. [cf section 8 of the current claims handling guidelines]

5.18 An APRA-authorised insurer must record whether a claim or claim payment relates to:

1. failure to commence
2. failure to complete
3. major defect
4. other loss
5. a combination of the above

5.19 An APRA-authorised insurer must conduct an internal review in the way which best supports the facts and circumstances of the claim and the claimant.

5.20 An APRA-authorised insurer must make the decision on the internal review within 30 business days of receipt of request for internal review.

5.21 An APRA-authorised insurer must communicate its decision on the internal review including reasons for the decision to the claimant in writing within one business day of making the decision. [cf section 8.2 of the current claims handling guidelines]

5.22 An APRA-authorised insurer must maintain a register of claim complaints and disputes. The complaints and disputes register must at minimum record the following information, in a manner that is able to be reported on a quarterly basis and for each financial year:

1. the name and address of the claimant,
2. the nature of each dispute,
3. the date the dispute was received,
4. how and when each dispute was resolved,
5. number of disputes the APRA-authorised insurer could not resolve,
6. number of complaints the APRA-authorised insurer has received about its conduct and service,
7. complaints received by any persons acting on behalf of the APRA-authorised insurer and disputes involving such persons, and
8. the number of decisions overturned in favour of claimant by internal dispute process and the reasons for change of decision. [cf section 11.3 of the current claims handling guidelines].

5.23 An APRA authorised insurer must record claims performance information in manner that is able to be reported on a quarterly basis and for each financial year, including:

1. number of open and closed claims,
2. number of claims about which a decision was made within the period prescribed under clause 39 of the Regulation,
3. number of claims about which a decision was made outside the period prescribed under clause 39 of the Regulation, and the reason why a further time was required in each case,
4. d. average number of days taken to complete a building inspection report from the date on which a person was appointed to do an inspection of the insured work, and
5. average number of days taken to settle a claim from the date on which the claim form was first received by the insurer in respect of each claim.

5.24 An APRA authorised insurer must record information about quality assurance mechanisms used by the insurer in respect of any third party providers contracted by the insurer to assist it in the management of claims, which must be recorded in a manner that is able to be reported on a quarterly basis and for each financial year, including:

1. a summary of quality assurance activities undertaken,
2. issues identified through quality assurance assessments and the actions taken to mitigate those issues, and
3. quality assurance outcomes and their key findings.

5.25 An APRA authorised insurer must prepare and give to the Authority within 60 business days of the end of each financial year, a report detailing how it has complied with the Authority’s customer service conduct principles in respect of claims during that financial year and detailing the actions that the insurer will take to improve its performance against those principles.

6. Market practices

6.1 An APRA-authorised insurer must record the construction type category of the insured work from Appendix A for each contract of insurance the insurer enters into, and must keep records of insurance in manner than enables the following matters to be reported by construction type:

1. the insurance premium charged for each contract of insurance,
2. each certificate of insurance issued by the APRA-authorised insurer, and
3. each notification of loss or claim processed by the APRA-authorised insurer.

6.2 Each time an APRA-authorised insurer issues a certificate of insurance, the APRA-authorised insurer must:

1. send a copy of a certificate of insurance to the other party to the contract for residential building work within 2 business days, other than in respect of work not carried out under a contract, and
2. inform the other party to the contract that if any of the details on the certificate are not correct, it may affect the validity of the certificate of insurance, and invite the other party to contact the insurer if they believe any of the details on the certificate are not correct.

6.3 An APRA-authorised insurer must within one business day of the contractor notifying the insurer that the insured work is complete, inform the other party to the contract for residential building work of:

1. date that the contractor has stated that the insured work was completed, and
2. inform the other party to the contract that if any of the details on the certificate are not correct, it may affect the validity of the certificate of insurance, and invite the other party to contact the insurer if they believe any of the details on the certificate are not correct.

6.4 An APRA-authorised insurer must have systems in place to ensure that for every certificate of insurance, all of the following information is recorded about the insured work:

1. the latitude and longitude coordinates,
2. ‘lot number’, ‘section’ and ‘deposited plan’,
3. suburb and postcode,
4. the unit number (if applicable), street number and street name, and
5. the development application number or complying development certificate number (if applicable), or whether the work is exempt development under the Environmental Planning and Assessment Act 1979.

6.5 An APRA-authorised insurer must require contractors to update or confirm the details in Part 1, section 6.4 of these guidelines on completion of the work.

6.6 An APRA-authorised insurer must have systems that validate the location information provided by contractors.

6.7 An APRA-authorised insurer must issue certificates of insurance in the form approved by the Authority included in Part 5 of these guidelines for the purpose of section 92, 96 or 96A of the Act.

6.8 An APRA-authorised insurer must publish the terms and conditions of their contracts of insurance. An APRA authorised insurer must give a minimum of 30 business days’ notice to contractors that are eligible to purchase insurance about any changes to the terms and conditions. [cf section 7.20 of the current premium guidelines].

6.9 An APRA-authorised insurer must cancel a certificate of insurance evidencing a contract of insurance and refund the premium paid in the following circumstances:

1. the contractor has certified in writing that the insured work has not commenced, and either no money has been paid to the contractor under the contract for that work or any money that has been paid has been refunded in full,
2. the contractor has provided proof of termination of the contract for the insured work, and
3. the contractor has provided written confirmation that, to the best of their knowledge, the certificate of insurance has not been used for any benefit and has not been given to third parties such as a certifying authority, lending authority, prospective purchaser, conveyancers, real estate agents and the like.

6.10 An APRA-authorised insurer may also cancel a certificate of insurance evidencing contract of insurance in the following circumstances:

1. the contractor has provided proof of that the work has become exempt from insurance requirements after the insurance was taken out.

6.11 If a contractor requests that an APRA-authorised insurer cancel a certificate of insurance, the APRA-authorised insurer must:

1. inform in writing the other party to the contract for the insured work at least 5 business days before cancelling the certificate of insurance,
2. inform the other party to the contract of the amount of money that will be refunded to the contractor, and
3. request that the other party to the contract contact the APRA-authorised insurer within 5 business days, if they do not agree to the insurance being cancelled.

6.12 If an APRA-authorised insurer issues a certificate of insurance for work that has already commenced, or been completed, or where payment for the work has already been made, the insurer must record that fact.

6.13 An APRA-authorised insurer must inform the Authority of any data quality issues relating to data reported by the insurer to the Authority as soon as the insurer becomes aware of the issue.

6.14 If an APRA-authorised insurer becomes aware that the details of a certificate of insurance are not correct, the insurer must re-issue the certificate with the correct details and within 2 business days inform in writing the beneficiary of the insurance of the changes made and the reason.

6.15 An APRA-authorised insurer must maintain consistency between information on the insurer’s files and data submitted to the Authority and record any changes to the data on the insurer’s files if amended.

6.16 If an APRA-authorised insurer becomes aware that an insured event has occurred in respect of a contractor that has entered into contracts of insurance for work that is yet to commence or has not been completed, the APRA-authorised insurer must contact in writing the beneficiaries of those contracts of insurance to:

1. inform the beneficiaries that the insured event has occurred in respect of the contractor, and
2. advise the beneficiaries how to make a claim in the event that they have suffered any insured loss in respect of the un-commenced or incomplete work on the beneficiary’s home.

Part 2 - Guidelines for the NSW Self Insurance Corporation (SICorp) trading as 'icare HBCF'

1. Prudential standards

1.1 SICorp must submit a prudential filing to the Authority by 30 September each year unless otherwise agreed by the Authority.

1.2 For the purposes of section 103EC(b) of the Act, SICorp must provide to the Authority as part of its annual prudential filing, a capital management plan signed by the chief executive of the SICorp. The capital management plan must:

1. set out how and when the SICorp will achieve full funding of the Home Building Compensation Fund,
2. consider pre and post reform portfolios separately (i.e. insurance written before or from 1 January 2018),
3. consider the funding arrangements specific to each of those portfolios
4. detail targets and trigger capital levels,
5. detail current and three-year projected capital levels relative to the target levels, and
6. detail SICorp’s action plan should capital levels fall below target levels.

1.3 SICorp must provide the Authority a copy of its financial report for each financial year and associated opinion of the Auditor-General prepared for the purposes of the Public Finance and Audit Act 1983 (NSW) within 10 business days of receipt of Auditor-General’s opinion.

1.4 SICorp must provide a copy of the Financial Condition Report prepared by SICorp’s appointed actuary to the Authority within 10 business days of SICorp receiving that Report.

1.5 SICorp must notify Authority in writing within 10 business days of any material breaches to these prudential standards.

1.6 SICorp must provide the Authority a copy of a valuation report prepared by their actuaries within 3 months of end of each:

1. financial year, and
2. calendar year

2. Business plan

2.1 For the purposes of section 105S(4) of the Act, SICorp must file with the Authority a three-year business plan, approved by its Board, detailing operations of SICorp (and Insurance and Care NSW to the extent it acts on SICorp’s behalf in relation to insurance under the Part 6 of the Act), including:

1. Organisation structure,
2. Organisation chart,
3. List of key personnel and their responsibilities,
4. Distribution model/channels and their compliance and quality assurance framework,
5. Third party arrangements to conduct SICorp’s business and compliance and quality assurance framework,
6. Governance framework, and
7. A statement of business intent and business plan as submitted to Treasury

2.2 SICorp must file its 3 years business plan by 30 September each year. [cf 6.2 of the current business plan guidelines]

2.3 For the purposes of section 105S(2)(a), if SiCorp significantly departs from its business plan, it must file its revised business plan with the Authority within 30 business days.

3. Premiums

3.1 The Home building compensation (premium) insurance guidelines (sl-2021-763) continue to apply to SICorp’s premiums filed prior the date on which these guidelines are published on the NSW Legislation website.

3.2 For the purposes of section 103BD(2) of the Act, SICorp must determine a premium for each of construction types listed in Appendix A of Part 4 of these guidelines.

3.3 For the purposes of section 103BE(5) of the Act, the period allowed for rejecting the premium is 8 weeks from the date on which SICorp provides all information to the Authority that is required by these Guidelines to be included in SICorp’s premium filing.

3.4 For the purposes of section 103BF(1) of the Act SICorp must file a premium or set of premiums within 6 months of the date on which these Guidelines are published on the NSW Legislation Website.

3.5 For the purpose of section 103BF(4) of the Act,  SICorp is not required to pay any fee in connection with the filing of premiums.

3.6 For the purposes of section 103BE of the Act, the premium filing must include the proposed commencement date for the premiums. 
[cf section 8.11 of the current premium guidelines]

3.7 For the purpose of section 103BD(2) of the Act, the premium filing must include:

1. description of additional coverage to be offered,
2. a description of the proposed rating structure,
3. the expected break-even premium rate for each construction type,
4. the proposed base premium to be charged for each construction type,
5. the function that relates base premium to contract price,
6. the impact of any allowance made for securities,
7. the allowance made for expenses including, but not limited to, distribution, underwriting, contract of insurance administration, claims handling and overheads, detail as to how expense loadings are applied (for example, flat expense per contract of insurance or as a percentage of the base premium),
8. the impact of inflating future cashflows and the inflation assumptions applied,
9. the impact of discounting future cashflows and the discount rate assumptions applied,
10. discounts and loadings applied to each level of each rating factor,
11. an explanation of any proposed percentage of gross premiums (excluding GST) intended to be retained as profit, before tax, and the actuarial basis for its calculation,
12. government taxes/levies applied, [cf 8.7 of the current premium guidelines]
13. an explanation, justification and quantification of effects on proposed premium changes from the SICorp’s current in-force filing, and
14. a comparison of actual experience with the projections made in the previous filing, which must cover:

i) the number and breakdown by construction type categories, rating factor and average premium of actual certificates issued during the previous 12 months with projections in the SICorp’s previous filings covering that period, and

ii) actual expenses for this product by type during the previous 12 months with projections in SICorp’s previous filings covering that period. [cf section 8.10 of the current premium guidelines]

3.8 The filing must include a projection of the following components over the next year, subdivided by rating factor and in aggregate:

1. number of certificates issued
2. contract price covered
3. written premium before the application of loadings and discounts
4. written premium after the application of loadings and discounts, and
5. government taxes/levies charged [cf section 8.8 of the current premium guidelines]

3.9 SICorp’s actuaries must sign-off to support:

1. the calculation of the risk premium: information must be provided separately for non-completion and defect claims and cover average claim frequency and average claim size assumptions. There must be a demonstrated link between experience over the full building cycle and the assumptions presented in the premium filing,
2. the allowance for expenses (the allowance made for expenses must be supported by evidence), and
3. risk factors and discounts/loadings. [cf section 8.9 of the current premium guidelines]

3.10 SICorp must use following factors at minimum to determine premium pricing:

1. contract value,
2. construction type, and
3. contractor risk factors. [cf section 7.3 of the current premium guidelines]

3.11 SICorp may also consider in pricing the factors of:

1. location of premises, and
2. developer risk ratings [cf section 7.4 of the current premium guidelines] (note: deleted section 7.1 of the current premium guidelines, already covered in eligibility guidelines)]

3.12 SICorp must seek the Authority’s approval to use additional factors in determining premiums. [cf 7.5 of the current premium guidelines]

3.13 SICorp must price contracts of insurance for the contract price of the insured work (inclusive of GST) (or, if there is no contract price, the reasonable market cost of the labour and materials involved), excluding the cost of the insurance (being the premium and any applicable taxes and insurance intermediary fees).
[cf 7.8 of the current premium guidelines]

3.14 SICorp must price any insurance relating to a contract for residential building work that exceeds a cost of $2 million per dwelling (inclusive of GST) as if that contract price were $2 million per dwelling (inclusive of GST).

3.15 SICorp must price contracts of insurance in accordance with the construction type categories prescribed in Appendix A of Part 4 of these guidelines. 
[cf 7.8 of the current premium guidelines]

3.16 In the event that a project does not fall within any one of the defined construction type categories, SICorp may assign the project to the category that SICorp considers best aligns to the level of project risk.
[cf 7.10 of the current premium guidelines]

3.17 SICorp must apply loadings and discounts for each contractor based on financial and/or non-financial risk factors filed with and approved by the Authority.
[cf 7.16 & 7.17 of the current premium guidelines]

3.18 SICorp may also apply loadings to the premiums for a contractor where SICorp identifies that the contractor has provided incorrect information or failed to provide to SICorp information reasonably required about any work that the contractor has insured, or if the contractor has failed to comply with its obligations under a contractor of insurance, including, but not limited to:

1. providing the full and correct details of other party to the contract for the work,
2. providing the full and correct address or other location information about the insured work,
3. providing the correct construction type of the work,
4. providing the correct contract price or reasonable market value of the insured work,
5. where the contractor has failed to declare any variations greater than 20% to the contract price of insured work (inclusive of GST) or the reasonable market value of the insured work, or
6. where the contractor has failed to pay any amount of premium that is due and payable to SICorp.

3.19 SICorp may offer a premium discount for insured work contracted to be done by a developer, if the developer achieves a level of rating specified by SICorp, where the rating is provided by a credit rating agency that holds an Australian financial services licence under the Corporations Act 2001 (Cth).
[cf section 7.18 of the current premium guidelines]

3.20 SICorp must publish on its website any premiums filed with, and not rejected by, the Authority and a premium calculator which can be utilised to accurately estimate or reconstruct the premium charged to contractors, within 10 business days of the earlier of:

1. the date on which the Authority notifies SICorp in writing that the Authority does not reject the premiums; or
2. the expiry of the period allowed for rejecting a premium in clause 3.3 of Part of these guidelines under section 103BE(5).
   [cf section 7.19 of the current premium guidelines]

3.21 Adjusting for factors, SICorp must charge premiums within 50 per cent of the approved base level premiums. [cf section 7.21 of the current premium guidelines].

3.22 SICorp must maintain a program of premium compliance assurance to ensure that insured contractors within their portfolio of insurance are compliant with their premium obligations in accordance with the home building compensation legislation. [cf section 10.1 of the current premium guidelines].

3.23 SICorp must maintain a register of all premium compliance assurance activities, findings and outcomes, in a form that may be reported for each quarter and financial year.
[cf section 10.2 of the current premium guidelines].

3.24 SICorp must have a dispute resolution process in place where a contractor may appeal aspects of their premium determination. The dispute process must include as a minimum:

1. contact details for appeals and reviews by SICorp,
2. a clear process for and internal register of complaints that can be reviewed by the Authority,
3. actions required by a contractor and SICorp  in the dispute process,
4. timeframes for lodging and resolving disputes,
5. procedures and service standards for acknowledgement of any request for review,
6. timeframes for completion and finalisation of the review, and
7. further options for the contractor that include lodging a complaint with the Authority.

3.25 SICorp must publish on its website and provide with each contract of insurance a summary estimating the percentage of total premium (inclusive of taxes and charges) that SICorp estimates is attributable to each of the following items:

1. SICorp’s administration costs and expenses,
2. any profit margin applied by SICorp,
3. levies imposed by the Authority to fund the Home Building Operational Fund and Home Building Insurers Guarantee Fund,
4. any duties applicable under the Duties Act of NSW (‘stamp duty’),
5. Goods and services tax,
6. amounts to be paid for the benefit of claimants, and
7. any other amounts additional to the above categories

4.Eligibility

4.1 The Home building compensation (eligibility) insurance guidelines (sl -2021 -762) continue to apply to SICorp’s eligibility model filed prior to the date on which these guidelines are published on the NSW Legislation website.

4.2 SICorp must file an eligibility model with the Authority:

1. if it proposes to amend or replace its existing eligibility model, or
2. if directed by the Authority in writing, within 60 days of the date of that direction, or if a different period is specified in the direction, within the period specified in that direction.
   [ cf section 7.2 of the current eligibility guidelines]

4.3 The eligibility model must at minimum include:

1. eligibility assessment criteria
2. application procedure
3. eligibility application form
4. project application form(s)
5. service standards
6. standard letters templates
7. information for contractors
8. complaints and dispute management processes
9. the date on which the eligibility model is proposed to take effect
10. a description of the risks that eligibility model is seeking to control, the manner in which it will effectively manage those risks, and the measurable performance targets that SICorp aims to achieve for those risks.
    [cf section 7.1 of the current eligibility guidelines]

4.4S ICorp must publish information for contractors about eligibility assessment criteria, requirements, application forms, service standards, complaints and review processes.

4.5 The eligibility criteria must include:

1. that a person applying for eligibility must be the holder of a contractor licence under the Act, or is taken to be the holder of a contractor licence under the Act because the person has automatic deemed registration under Part 3A of the Mutual Recognition Act 1992 of the Commonwealth,
2. defined financial and/or non-financial criteria, [cf section 6.5.1 of the current guidelines]
3. circumstances in which SICorp will have the discretion to refuse to issue a certificate of insurance or will apply conditions to the issue of a certificate of insurance to a contractor to whom SICorp had granted eligibility. [cf section 6.2 of the current guidelines], and
4. risk factors that SICorp will consider offering discount or loading to the base premiums for contractors when issuing certificate of insurance.

4.6 The eligibility criteria may require that a contractor meet additional conditions to reflect the relevant risk including:

1. obtaining a specified rating from a credit rating agency that holds an Australian financial services licence under the Corporations Act 2001 (Cth),
2. participating in mentoring or review programs,
3. obtain a director, adult beneficiary or trustee guarantee, or
4. obtain an indemnity of undertaking from a third party.
   [cf sections 6.6 of the current guidelines]

[Drafting note: provisions in these guidelines concerning SICorp accepting security are subject to the outcome of a SIRA forensic accounting review of SICorp’s practice of accepting deeds of indemnity from some contractors]
[cf sections 6.4, 6.5 and 6.6 of the current eligibility guidelines]

4.7 If SICorp determines that the contractor is eligible to enter into a contract of insurance, SICorp must:

1. define the start date from when a contractor is eligible to enter into contract of insurance with SICorp,
2. provide the contractor with a defined scope of projects for which it will offer insurance, and which at a minimum must include a dollar value measure of that scope, and
3. accept applications from the contractor for contracts of insurance within that defined scope and subject to any limits and conditions specified in SICorp’s eligibility model.
   [cf section 5.1 of the current eligibility guidelines]

4.8 SICorp must provide the eligibility decision to the contractor in writing.
[cf section 5.2 and 6.7 of the current eligibility guidelines]

4.9 SICorp must record and provide reasons to the contractor if:

1. requiring further information from the contractor,
2. declining eligibility,
3. not granting eligibility for scope of projects sought by the contractor,
4. imposing any condition(s) the contractor must comply with as a condition of eligibility, and/or
5. amending the terms and conditions of a contractor’s eligibility or revoking eligibility.
   [cf section 6.8 of the current eligibility guidelines]

4.10 SICorp may grant eligibility on an ongoing basis or for a set time period.[cf section 6.9 of the current eligibility guidelines]

4.11 SICorp must give at least 30 business days’ notice to a contractor when the contractor’s eligibility is set to expire. The notification must include information about how the contractor can renew their eligibility. [cf section 6.10 of the current eligibility guidelines]

4.12 SICorp’s eligibility model must include systems to monitor or review the risk or adverse events associated with each eligible contractor.
[cf section 6.11 of the current eligibility guidelines].

4.13 SICorp’s eligibility model must specify a service standard for the period of notice SICorp will give to a contractor prior to undertaking an eligibility review. SICorp may propose different notice periods for different types of contractors. The period of notice must be reasonable having regard to the Authority’s customer service conduct principles.  [cf section 6.12 of the current eligibility guidelines]

4.14 SICorp’s eligibility model must specify a service standard for the target duration within which SICorp will complete an eligibility review. SICorp may propose different target durations for different types of contractors provided that is consistent with the Authority’s customer service conduct principles.
[cf section 6.13 of the current eligibility guidelines]

4.15 SICorp may continue, revise, restrict, suspend or cancel a contractor’s eligibility based on the findings of an eligibility review. Such decisions must comply with requirements of these guidelines for eligibility decisions, suspension or cancellation as applicable. [cf section 6.14 of the current eligibility guidelines]

4.16 If SICorp determines to suspend a contractor’s eligibility, SICorp must provide the contractor with 10 business days written notice, except in circumstances which warrant immediate suspension. The notice must inform the contractor:

1. the reasons for the decision to suspend the contractor’s eligibility,
2. that it is an offence for the contractor to do, or request or receive any payment for, work that requires insurance, if the contractor has not entered into a contract of insurance for the work under section 92 or 96 of the Act, and
3. that the Authority may inform NSW Fair Trading that the contractor has ceased to be eligible to purchase insurance from SICorp.
   [cf section 6.16 of the current eligibility guidelines]

4.17 SICorp may suspend eligibility immediately if:

1. contractor’s licence is expired or suspended,
2. contractor has not complied by the due date with a rectification order, or an order determined by the Tribunal or court for a building claim under the Act,
3. there is not a nominated supervisor for the contractor licence,
   d.SICorp determines that the contractor has committed an offence under the Act, or
4. contractor does not comply with the conditions of its eligibility. [cf section 6.17 of the current eligibility guidelines]

4.18 SICorp must give the contractor at least 30 business days’ notice of its decision to cancel a contractor’s eligibility, except in circumstances that warrant immediate cancellation. [cf section 6.19 of the current eligibility guidelines]

4.19 SICorp may cancel eligibility immediately if:

1. contractor’s licence is cancelled, surrendered or expired for longer than three months,
2. contractor has died, disappeared or become insolvent,
3. contractor requests it to be cancelled,
4. SICorp has reason to believe the contractor has provided, false, fraudulent, or misleading information in connection with eligibility or a project application or provided an external party with a fraudulent certificate of insurance or certificate of eligibility. [cf section 6.20 of the current eligibility guidelines]

4.20 If SICorp immediately cancels a contractor’s eligibility, SICorp must give reasons for the decision to the contractor in writing within 5 business days.

4.21 SICorp must require contractors to advise SICorp of the date on which each insured work was completed, within 3 months of the date of that completion, as a condition of continued eligibility.

4.22 SICorp must maintain a register of SICorp’s monitoring of emerging risks relating to contractors, in a manner that is able to be reported on a quarterly basis and for each financial year.

4.23 SICorp must prepare and give to the Authority within 60 business days of the end of each financial year, a report detailing how it has complied with the Authority’s customer service conduct principles in respect of eligibility during that financial year and detailing the actions that SICorp will take to improve its performance against those principles.

4.24 SICorp must have a process in place where a contractor may appeal aspects of their eligibility determination. The dispute process must include as a minimum:

1. contact details for appeals and reviews within SICorp
2. a clear process for and internal register of complaints that can be reviewed by the Authority.
3. actions required by a contractor and SICorp in the dispute process
4. timeframes for lodging and resolving disputes
5. procedures and service standards for acknowledgement of any request for review
6. timeframes for completion and finalisation of the review
7. further options for the contractor that include lodging a complaint with the Authority [cf section 9.1 of the current eligibility guidelines]

5. Claims handling

5.1 The Home building compensation (claims handling) insurance guidelines (2017-737) continue to apply to SICorp’s claims handling model filed prior to the date on which these guidelines are published on the NSW Legislation website.

5.2 SICorp must file a claims handling model with the Authority:

1. if it proposes to amend or replace its existing eligibility model, or
2. if directed by the Authority in writing, within 60 days of the date of that direction, or if a different period is specified in the direction, within the period specified in that direction.

5.3 The model must at minimum include:

1. Claims handling procedures
2. Service standards that meet the guideline requirements and SIRA’s Customer Service Conduct Principles
3. Management and response to significant losses eg. major builder collapse
4. Information for claimants
5. Standard letter templates
6. Complaints and dispute management processes
7. Roles and responsibilities including management of third party providers (if any)
8. Quality assurance procedures
9. Proposed commencement date of the model [cf 10.2 of current claims handling guidelines]

5.4 The claim handling procedures must at minimum include:

1. Notification of loss
2. Notification of claim
3. Minimum information required to lodge a claim
4. Claims assessment process
5. Settlement methods
6. Internal review process
7. Claims finalisation process

5.5 SICorp must not use a model that has not been accepted by the Authority. Once the Authority has accepted the claims management model, SICorp must apply the claims management model from the proposed commencement date of the model without discretion. [cf section 10.7 of current claims handling guidelines]

5.6 SICorp must publish its loss notification form and claim forms, and claims handling procedures and claims process on its website. [cf section 5.6 of the current claim handling guidelines].

5.7 SICorp must within one business day of receiving a loss notification form, acknowledge receipt of the loss notification form including:

1. in what circumstances a person is entitled to claim
2. the time period within which a claim must be lodged and
3. a description of the claim process and information required by SICorp to assess a claim
   [cf section 6.12 of the current claims handling guidelines].

5.8 If SICorp is aware, or becomes aware, that an insured event has occurred in respect of a contractor, SICorp must inform within 2 business days in writing each person who notifies, or has notified, SICorp of loss associated with that contractor:

1. the fact that an insured event has occurred in respect of the contractor,
2. that a claim may be lodged or, if the insured event is the contractor’s deemed insolvency for failing to pay a monetary order of NCAT or the court to a different claimant, that the person may apply to NCAT or the court to obtain a compensation order that can provide a basis for the person to make an insurance claim, and
3. provide a copy of SICorp’s claim form.

5.9 On receiving a claim form from a claimant, SICorp must within one business day of receipt of a claim form in writing, acknowledge the receipt of the claim form including:

1. an explanation of steps that it will take to assess the claim,
2. the time periods and circumstances within which SICorp is deemed to have accepted liability for the insurance claim under the Act or the Regulation, and
3. if the claim relates to non-completion of work, information about the support available from the insurer to mitigate the claimant’s loss, including but not limited to, temporary fencing or barrier systems that are reasonably necessary to secure the insured work
   [cf section 6.12.6(a) - 6.12.6(c) of the current claims handling guidelines]

5.10 SICorp must within 10 business days of receiving a claim, inform the claimant in writing whether or not SICorp accepts that an event in which a claim may be made has occurred or, alternatively, whether SICorp requires further information.
[cf section 6.12.5(a) of the current claims handling guidelines]

5.11 Within 10 business days of informing a claimant that SICorp accepts that an event in which a claim may be made has occurred, SICorp must determine if the property will need to be inspected and if so:

1. appoint a person to inspect the property, and
2. provide the contact details of that person to the claimant. [cf section 6.12.7 of the current claims handling guidelines]

5.12 If SICorp at any time forms the view that an event in which a claim may be made has not occurred, SICorp must inform the claimant in writing within one business day and provide details of the source of that belief. [cf section 6.12.5(b) of the current claims handling guidelines]

5.13 SICorp must ensure that any person inspecting a property on its behalf has a current licence, registration or qualification if required under the Act or any other applicable law. [cf section 6.12.10 of the current claims handling guidelines]

5.14 SICorp’s claim handling model must include systems to monitor that residential building work arranged by SICorp in connection with claims:

1. complies with the National Construction Code
2. will be performed by a licensed contractor
3. will be performed at reasonable market cost

5.15 SICorp must inform the claimant about a claim decision in writing including:

1. whether SICorp accepts the claim in full or part or has reduced its liability or rejects the claim [cf section 7.1 of the current claims handling guidelines]. and
2. if the claim is not accepted in full, provide the claimant with reasons together with copies of reports, if any, that they relied upon to make that decision [cf section 5.12 of the current claims handling guidelines].

5.16 If SICorp forms the view that it will be unable to make a decision about a claim within the period prescribed by clause 39 of the Regulation, SICorp must notify the claimant in writing at least 10 business days prior to expiry of the period:

1. the reasons for the delay and
2. request agreement from the claimant for further timeframe
3. offer partial settlements of the claim or interim payment, where it is clear that liability is at least as much as the amount to be paid.

5.17 When SICorp makes a claims decision, it must give a written notice to the claimant about the decision, including options to make a complaint or dispute the claim decision. [cf section 7 of the current claims handling guidelines]

5.18 SICorp’s complaint and dispute processes must at a minimum include:

1. frontline complaint handling to focus on early resolution
2. option for internal review if the claimant is not satisfied by the frontline complaint handling process, and
3. information for claimants about how to make a complaint to the Authority and that the claimant may appeal the claim decision through a court or tribunal. [cf section 8.1 of the current claims handling guidelines]

5.19 SICorp must record whether a claim or claim payment relates to:

1. failure to commence
2. failure to complete
3. major defect
4. other loss
5. a combination of the above

5.20 SICorp must conduct an internal review in the way which best supports the facts and circumstances of the claim and the claimant.

5.21 SICorp must make the decision on the internal review within 30 business days of receipt of request for internal review. [cf section 8.2 of the current claims handling guidelines]

5.22 SICorp must communicate its decision on the internal review including reasons for the decision to the claimant in writing within one business days of making the decision – currently as quickly as is practicable. [cf section 8.2 of the current claims handling guidelines]

5.23 SICorp must maintain register of claims complaints and disputes. The complaints and disputes register must at minimum record the following information, in a manner that is able to be reported on a quarterly basis and for each financial year:

1. the name and address of the claimant
2. the nature of each dispute
3. the date the dispute was received
4. how and when each dispute was resolved
5. number of disputes SICorp could not resolve, and
6. number of complaints SICorp has received about its conduct and service
7. complaints received by the persons acting on behalf of SICorp and disputes involving such persons
8. number of decisions overturned in favour of claimant by internal dispute process and the reasons for change of decision. [cf section 11.3 of the current claims handling guidelines].

5.24 SICorp must record claims performance information in manner that is able to be reported on a quarterly basis and for each financial year, including:

1. number of open and closed claims
2. number of accepted and denied claims within the period prescribed by regulations
3. number of claims accepted and denied after the period prescribed by regulations and the reasons for that
4. average number of days taken to complete a building inspection report
5. average number of days taken to settle a claim

5.25 SICorp must record information about quality assurance mechanisms used by SICorp in respect of any third party providers contracted by SICorp to assist it in the management of claims, which must be recorded in a manner that is able to be reported on a quarterly basis and for each financial year, including:

1. a summary of quality assurance activities undertaken
2. issues identified through quality assurance assessments and actions taken to mitigate the issues
3. quality assurance outcomes and their key findings

5.26 SICorp must prepare and give to the Authority within 60 business days of the end of each financial year, a report detailing how it has complied with the Authority’s customer service conduct principles in respect of claims during that financial year, and detailing the actions that SICorp will take to improve its performance against those principles.

6. Market practices

6.1 SICorp must record the construction type category of the insured work from Appendix A for each contract of insurance SICorp enters into, and must keep records of insurance in manner than enables the following matters to be reported by construction type:

1. the insurance premium charged for each contract of insurance,
2. each certificate of insurance issued by SICorp, and
3. each notification of loss or claim processed by SICorp.

6.2 Each time SICorp issues a certificate of insurance, SIcorp must:

1. send a copy of a certificate of insurance to the other party to the contract for residential building work within 2 business days, other than in respect of the work not carried out under a contract, and
2. inform the other party to the contract that if any of the details on the certificate are not correct, it may affect the validity of the certificate of insurance, and invite the other party to contact the insurer if they believe any of the details on the certificate are not correct.

6.3 SICorp must within one business day of the contractor notifying SICorp that the insured work is complete, inform the other party to the contract for residential building work of:

1. date that the contractor has stated that the insured work was completed, and
2. inform the other party to the contract that if any of the details on the certificate are not correct, it may affect the validity of the certificate of insurance, and invite the other party to contact the insurer if they believe any of the details on the certificate are not correct.

6.4 SICorp must have systems in place to ensure that for every certificate of insurance, the following information is recorded about the insured work:

1. the latitude and longitude coordinates,
2. ‘lot number’, ‘section’ and ‘deposited plan’
3. suburb and postcode
4. unit number (if applicable), street number and street name and
5. development application number or complying development certificate number (if applicable), or whether the work is exempt development under the Environmental Planning and Assessment Act 1979

6.5 SICorp must require contractors to update or confirm the details in Part 2, section 6.4 of these guidelines on completion of the work.

6.6 SICorp must have systems in place that validate the location information provided by contractors.

6.7 SICorp must issue certificate of insurance in the form approved by the Authority included in Part 5 of these guidelines for the purpose of section 92, 96 or 96A of the Act

6.8 SICorp must publish the terms and conditions of their contracts of insurance. SICorp must give a minimum of 30 business days’ notice to contractors that are eligible to purchase insurance about any changes to the terms and conditions. [cf section 7.20 of the current premium guidelines].

6.9 SICorp must cancel a certificate of insurance evidencing contract of insurance and refund the premium paid in the following circumstances:

1. the contractor has certified in writing that the insured work has not commenced, and either no money has been paid to the contractor under the contract for that work or any money that has been paid has been refunded in full,
2. if the contractor has provided proof of termination of the contract for the insured work, and
3. if the contractor has provided written confirmation that, to the best of their knowledge, the certificate of insurance has not been used for any benefit and has not been given to third parties such as certifying authority, lending authority, prospective purchaser, conveyancers, real estate agents and the like.

6.10 SICorp may cancel a certificate of insurance evidencing contract of insurance in the following circumstances:

a. the contractor has provided proof of that the work has become exempt from insurance requirements after the insurance was taken out.

6.11 If a contractor requests that SICorp cancel a certificate of insurance, SICorp must:

1. inform in writing the other party to the contract for the insured work at least 5 business days before cancelling the certificate of insurance,
2. inform the other party to the contract of the amount of money that will be refunded to the contractor, and
3. request that the other party to the contract contact SICorp within 5 business days, if they do not agree to the insurance being cancelled.

6.12 If SICorp issues a certificate of insurance for work that has already commenced or completed or where payment for the work has already been made, SICorp must record that fact.

6.13 SICorp must inform the Authority of any data quality issues relating to data reported by SICorp to the Authority as soon as the insurer becomes aware of the issue.

6.14 If SICorp becomes aware that the details of a certificate of insurance are not correct, SICorp must re-issue the certificate with the correct details and within 2 business days inform in writing the beneficiary of the insurance of the changes made and the reason.

6.15 SICorp must maintain consistency between information on SICorp’s files and data submitted to the Authority and record any changes to the data on the insurer’s files if amended.

6.16 SICorp must not allow authorised representatives of its approved broker distributors, if any, to provide insurance on their behalf.

6.17 SICorp must inform the Authority within 2 business days of becoming aware of:

1. significant breach (or likely breach) of SICorp’s responsibilities under the home building compensation legislation and licence conditions,
2. matter that will prevent SICorp from meeting any requirement for operation as a licence holder in accordance with the home building compensation legislation,
3. be regarded as significant because it involves legal issues or litigation that may have significant implications for the home building compensation scheme,
4. notifiable data breach of the Privacy Amendment (Notifiable Data Breaches) Act 2017 (Cth) (Privacy Act) that relates (in whole or in part) to SICorp’s home building compensation business, or
5. any other matter that may have a significant regulatory impact or be of significant public interest for SICorp or the home building compensation scheme.

6.18 SICorp must update the Authority as any additional information relating to the progress or outcome of the matters mentioned in Part 2, section 6.16 of these guidelines within five business days of the additional information becoming available.

6.19 SICorp must maintain a register of underwriting complaints and disputes. The complaints and disputes register must at minimum record the following information, in a manner that is able to be reported on a quarterly basis and for each financial year:

1. the name and address of the contractor
2. the nature of each dispute
3. the date the dispute was received
4. how and when each dispute was resolved
5. number of disputes SICorp could not resolve, and
6. number of complaints SICorp has received about its conduct and service
7. complaints received by the persons acting on behalf of SICorp and disputes involving such persons
8. number of decisions overturned in favour of contractor by internal dispute process and the reasons for change of decision

6.20 If SICorp becomes aware that an insured event has occurred in respect of a contractor that has entered into contracts of insurance for work that is yet to commence or has not been completed, SICorp must contact in writing the beneficiaries of those contracts of insurance to:

1. inform the beneficiaries that the insured event has occurred in respect of the contractor, and
2. advise the beneficiaries how to make a claim in the event that they have suffered any insured loss in respect of the un-commenced on incomplete work on the beneficiary’s home.

Part 3: Glossary

The terms used in these Guidelines have the following meanings:

Part 4: Appendices

Appendix A: Construction types

References to a ‘Class 1a’, ‘Class 2’ or ‘Class 10’ or ‘mixed use’ building or structure in the below definitions of construction type categories have the same meanings as they do for the purposes of the National Construction Code published by or on behalf of the Australian Building Codes Board.

‘Secondary dwelling’ has the same meaning as in the principal local environmental planning instrument prescribed by the Standard Instrument (Local Environmental Plans) Order 2006.

The construction type categories are:

Part 5: Approved form for certificates of insurance

Details of contract of insurance

A contract of insurance complying with section 92*/96*/96A* of the Home Building Act 1989 has been issued by [insert name of insurer].

* The contract was issued in respect of [insert brief description of building work] at [insert the address or description of the land including latitude and longitude, lot number and section and deposited plan] to be carried out by [insert name and licence number of licensed contractor].

Period of insurance

The contract of insurance provides cover for:

(a)  * the construction period only, or

(b)  * the warranty period only, or

(c)  * both the construction period and the warranty period.

Provision of conditions

Subject to the Home Building Act 1989 and the Home Building Regulation 2014 and the conditions of the insurance contract, cover will be provided to:

(a)  * a beneficiary described in the contract and successors in title to the beneficiary,

OR

(b)  * the immediate successor in title to the contractor or developer who did the work and subsequent successors in title.

Contract price for residential building work

The total price of the contract for residential building work including any variations [insert total contract price inclusive of GST]

Premium

The premium in respect of the insurance is [insert total amount of premium].

Cost of additional products or services under contract

The cost of the additional products or services provided as part of the building cover contract is [insert total costs of products or services under contract].

Price

The total price of the insurance contract inclusive of any applicable taxes is [insert total price, inclusive of tax].

Note:

The total price does not include any brokerage or other costs to arrange the insurance contract.

Additional Information

[Additional information, not inconsistent with the Act or Regulation, may be included here]

Date: [insert date]

Signed for or on behalf of the insurer: [insert signature]

* Delete whichever is not applicable.

IMPORTANT NOTE

Your contractor must give you either:

(a)  a certificate of combined cover,

OR

(b)  2 certificates, one covering construction period cover and a second certificate covering the warranty period for the work.