Home Building Regulation 2014

A construction period alternative indemnity contract must indemnify beneficiaries under the contract for loss or damage in respect of residential building work covered by the construction period alternative indemnity contract 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.

A construction period alternative indemnity contract must indemnify beneficiaries under the contract for loss or damage in respect of the non-completion of residential building work covered by the construction period alternative indemnity contract 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 subclauses (1) and (2), a construction period alternative indemnity contract must indemnify a beneficiary for the following loss or damage in respect of the non-completion of residential building work, 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 the 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 the non-completion,

loss of deposit or progress payment due to the non-completion,

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 construction period 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 this clause, if residential building work has not commenced, the construction period 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.