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HOME BUILDING REGULATION 2014 - REG 62K
Losses indemnified under alternative indemnity contracts (where single contract)
(1) This clause does not apply to a warranty period fidelity fund contract or
a construction period fidelity fund contract.
(2) 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-- (a) loss or damage
resulting from non-completion of the work because of-- (i) the insolvency,
death or disappearance of the contractor, or
(ii) the suspension of a
contractor licence pursuant to section 42A of the Act, and
(b) 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-- (i) the insolvency, death or
disappearance of the contractor, or
(ii) the suspension of a contractor
licence pursuant to section 42A of the Act.
(3) 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-- (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 an event referred to
in subclause (2),
(d) loss of deposit or progress payment due to an event
referred to in subclause (2),
(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 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.
(5) 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.
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