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Owner Builders and Workers Compensation Facts

This article is by Simon Pascoe at FDBeck Insurance Brokers – A specialist competitive broker service helping Owner Builders with their insurance needs.  

Owner Builder Insurance PoliciesOwner Builder construction insurance policies do not include personal injury claims imposed by Workers Compensation Law. Therefore because you are the Principal Contractor the risk must be separately covered under a specific workers compensation policy issued through a nominated licensed insurer.

Many Owner Builders make the mistake of thinking that because they don’t directly employ anyone then they don’t need workers compensation insurance. Like all insurance and like all legislation imposed by Government the devil is in the detail. It’s important to note that a contractor engaged by you, as the Owner Builder, may be deemed to be a worker under certain provisions of various legislation. Therefore it is highly recommended that Owner Builders seek a simple, basic (or casual) workers’ compensation insurance policy. You need to remember: As the Owner Builder you are the Principal Contractor and as such the buck stops with you. Make sure you are covered.

A common example is where as an Owner Builder asks a family member or friend who is a carpenter to work for them on weekends whilst they are building their new home.  If the carpenter/family member or friend is employed by a propriety limited company during week days, then during this time they will be covered by their employers’ workers compensation policy. However their employers’ workers compensation policy will not extend to cover them whilst they are working for the Owner Builder on a direct basis and outside of their normal employment contract. In the event of a work injury on your site you will be liable for the workers compensation claim and will need to pay the damages.

Another example is when your contractor hires casual labour and then doesn’t insure them for workers compensation. Again as the Owner Builder you could be held jointly liable if there is an accident to that worker and you did not check with the contractor to ensure that sufficient cover was provided for that worker by the contractor.

The best protection is simply to make sure that you don’t leave yourself exposed as an Owner Builder. A  minimum premium workers compensation policy can be taken out very cost effectively. Even if you don’t employ or plan to employ any staff we still suggest that you purchase a minimum premium policy. Workers compensation varies depending on which Australian State you are located in, but in most cases you may only be talking about a few hundred dollars.

For your convenience there is a list of contacts for each Australian State at Owner Builder Insurance.

Building an Extension

“How come building an extension costs so much?”

High Prices for RenovationsThis is a common question asked by Owner Builders who are looking at a major extension and renovation to an existing property. But it’s not just Owner Builders who query the high costs of extension projects. Many people who wanted to contract a builder to take care of an extension project have been shocked by builder’s quotes, and even though these people never dreamed of Owner Building, they now feel that it’s the best choice available to them.

Extensions are tricky and challenging, and often builders don’t enjoy doing them. They never really know what’s behind that blank wall, so to speak, and so when they quote they do so accordingly. It’s not unusual for builders to quote well over $2000 per square metre and as much as $3000 per square metre. Crazy, isn’t it! If you accept the price quoted and it turns out to be a straightforward job – then the builder will do very well from your business!

Here are some questions you should ask when considering a large extension project:

  1. “Will I be over capitalising?”

    This is difficult to answer as each situation is unique.

    Do the research and then consider what you are trying to achieve and then budget $2000 per square metre for the cost of building the extension to begin with. Costing out the renovation of the existing property is much more difficult and depends on many variables, but you must have a conservative budget.

    Consider then what the finished product would be worth in terms of the market value. And be reasonable; everyone overvalues their property. The numbers will tell you if you are on the right track.

    Get independent experts to review your numbers and let them give you constructive feedback.

  2. “How will I get the design to work?”

    The first challenge with a good extension project is design.  The key is finding a good draftsman who has real experience with major extensions.

    Now before we go any further, let’s define a major extension: Anything in which you are adding additional floor space and roof span to an existing dwelling in excess of around 60m2. Anything less than that you should not be getting quoted the ridiculous prices. But you should definitely consider Owner Building because the degree of difficulty is manageable. 

  3. “What are my planning requirements? Will it get approved by council?”

    Again this particular issue needs to be dealt side by side with the drafting and design. Make sure your draftsman knows his or her stuff before hiring them. Ask for referrals from people who have undertaken similar extension projects.

    Alternatively, find out if the council use Private Certifiers and if so, locate a good one. Still unsure? Give us a call and we will give you some advice based on what you wish to achieve. UBuild Homes provide Kit Home Packages tailored to Owner Builders who are taking on the challenge of building an extension to their existing home.  

  4. “Can I live in the house while I do the extension and renovation?”

    This is a great question. Ideally, if possible, stay in the house. It’s cheaper and you can be close by to manage the extension project and the trades, etc. Downside is it’s a bit of pain to get the gain – you have to live in some pretty messy surroundings for a while. Then the question becomes – are you actually able to stay in the house? And that’s a question for council and the Private Certifiers.

As more and more home owners consider a major extension and renovation to their homes as an alternative to selling up and buying or building elsewhere, the prices and hassles involved are steering them along the Owner Builder path. It certainly makes sense financially – but you still need to do your research and tick all the boxes.

If you have an extension or renovation in mind why not touch base with us? UBuild Homes can offer you a customised, cost effective kit package that will help you successfully complete your reno project far cheaper than most builders can.