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HOME BUILDING REGULATION 2014 - REG 40A
Losses indemnified under construction period insurance contracts
40A Losses indemnified under construction period insurance contracts
(1) A construction period insurance contract must indemnify beneficiaries
under the contract for loss or damage in respect of residential building work
covered by the construction period insurance contract resulting from
non-completion of the work because of-- (a) the insolvency, death or
disappearance of the contractor, or
(b) the suspension of a contractor
licence pursuant to section 42A of the Act.
(2) A construction period
insurance 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 insurance 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-- (a) the insolvency, death or disappearance of the contractor, or
(b) the suspension of a contractor licence pursuant to section 42A of the Act.
(3) Without limiting subclauses (1) and (2), a construction period
insurance 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-- (a) loss or damage
resulting from faulty design, where the design was provided by the contractor,
(b) 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,
(c) the cost of alternative
accommodation, removal and storage costs reasonably and necessarily incurred
as a result of the non-completion,
(d) loss of deposit or progress payment
due to the non-completion,
(e) 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.
(4) The
construction period insurance 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.
(5) For the purposes of this clause, if
residential building work has not commenced, the construction period
insurance 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.
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