New South Wales Consolidated Acts

HOME BUILDING ACT 1989 - SECT 99

99 Requirements for insurance for residential building work

(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 recover compensation from the contractor for a breach of a statutory warranty in respect of the work, or

(ii) to have the contractor rectify 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) A contract of insurance in relation to residential building work required by section 92 must include provision that deems the suspension of a contractor’s licence under section 42A to constitute the insolvency of the contractor for the purposes of the application of the policy to any loss that is the subject of a building claim order made against the contractor that remains unsatisfied.

(4) The following provisions apply to a claim under a contract of insurance that arises because of the operation of subsection (3) in connection with a building claim order:

(a) the claim is limited to a loss that would have been covered by the contract in the event of the contractor’s insolvency,

(b) the amount of the claim need not be the same as the amount of the building claim order (and in particular is not limited by the amount of the building claim order),

(c) the building claim order does not limit any right of a beneficiary to appeal against a decision of the insurer in respect of a claim under the contract (and any such right of appeal may be exercised as if the building claim order had not been made),

(d) the building claim order does not limit any right of recovery of the insurer against the contractor in respect of the loss to which the claim relates (whether that right arises pursuant to any rights of the beneficiary to which the insurer is subrogated, or otherwise).

(5) For the purposes of the operation of a provision of a contract of insurance referred to in subsection (3), a contractor’s licence that would have been suspended under section 42A were it not for the fact that the licence expired, or was surrendered or cancelled, before the suspension took effect is taken to have been suspended under that section.

(6) In this section:
"building claim order" has the same meaning as in section 42A.