Home Building Regulation 2014

This clause does not apply to a warranty period fidelity fund contract or a construction period fidelity fund contract.

An alternative indemnity contract must indemnify beneficiaries under the fidelity fund for the following losses or damage in respect of residential building work covered by the alternative indemnity contract—

loss or damage resulting from non-completion of the work because of—

the insolvency, death or disappearance of the contractor, or

the suspension of a contractor licence pursuant to section 42A of the Act, and

loss or damage arising from a breach of a statutory warranty, being loss or damage in respect of which the beneficiaries cannot recover compensation from the contractor or have the contractor rectify because of—

the insolvency, death or disappearance of the contractor, or

the suspension of a contractor licence pursuant to section 42A of the Act.

Without limiting subclause (2), an alternative indemnity contract must indemnify a beneficiary for the following loss or damage, being loss or damage in respect of which a beneficiary cannot recover compensation from the contractor concerned, or have the contractor rectify, because of the insolvency, death or disappearance of the contractor or suspension of a contractor licence pursuant to section 42A of the Act—

loss or damage resulting from faulty design, where the design was provided by the contractor,

loss or damage resulting from non-completion of the work because of early termination of the contract for the work because of the contractor’s wrongful failure or refusal to complete the work,

the cost of alternative accommodation, removal and storage costs reasonably and necessarily incurred as a result of an event referred to in subclause (2),

loss of deposit or progress payment due to an event referred to in subclause (2),

any legal or other reasonable costs incurred by a beneficiary in seeking to recover compensation from the contractor for the loss or damage or in taking action to rectify the loss or damage.

The alternative indemnity contract must state that the risks indemnified include the acts and omissions of all persons contracted by the contractor or other person to perform the work resulting in loss or damage of a kind referred to in this clause.

For the purposes of subclause (2), if residential building work has not commenced, the alternative indemnity contract may limit the loss or damage indemnified against to the loss of any deposit paid, but is not required to limit the loss or damage to that amount.