A new home warranty insurance product will improve the negotiating power of owner-builders at the point of sale while also providing home-buyers with peace of mind.
Australian Owner Builders Insurance Services (AOBIS) has launched a product that aims to fill major cracks in the NSW, Queensland, South Australia and ACT owner-builder markets.
The product will provide protection for a home purchaser if a defect is found and the owner-builder who sold them the property has died, gone missing or become insolvent.
“This gives the purchaser comfort when buying an owner built home that there is a warranty in place to protect them in the event of unforeseen circumstances,” AOBIS Senior Underwriter Stacey Newham told Broker Buzz.
“The policy will cover any defects that arise during the warranty period, which is six years from the occupancy date.”
Owner builder warranty insurance is not compulsory across most of Australia, meaning the only states that it’s previously been available to purchase is in Victoria and Western Australia – where it’s mandatory when an owner-builder sells their home within six years of completing works.
Newham says as the product is not a statutory requirement elsewhere, brokers in NSW, Queensland, SA and ACT will need to focus on selling the benefits it can offer owner-builders and renovators.
“The pricing is very reasonable. And it could save them money when it comes to negotiating the price on their house because they’ll have that warranty,” she said.
“Usually they’d have to negotiate that factor when selling the home, which would bring the price down. It really gives the owner-builder the opportunity to sell their home with the same warranty protection as a builder.”
Newham says the decision to make the new home warranty insurance product available in states outside Victoria and Western Australia has come about due to overwhelming feedback they were getting from owner-builders, particularly in NSW.
“Once the owner-builder warranty in NSW was no longer a requirement, a lot of people stepped out of the market and you couldn’t source it anymore,” she says.
“So it became hard for owner-builders to negotiate when selling their home – it was a big problem. Therefore we’ve pushed hard with the underwriter Assetinsure to provide this.”
Brokers seeking more information on the product can visit the AOBIS website.