QUESTION
We have a discussion going on about just completed spec homes, that are unoccupied.
Do these qualify as a dwelling, and therefore have NHCover available to them?
I can't find a specific mention anywhere, the closest being show homes - which aren't covered. My assumption is that a spec home can get cover however, as it is intended to be occupied as a dwelling once sold.
EXPERT ANSWER: Lynne Robinson, Natural Hazards Commission
The assessment of whether a building, or part of a building, is a dwelling (the ‘dwelling test’) is a two-step test. This determination must be made at policy inception and each time the policy is renewed.
For a building (or part of a building) to be a dwelling under the NHI Act, it must be both:
• self-contained, and
• someone’s home or holiday home (or capable of/intended by its owner to be used as such).
The first step relates to the physical construction of the building. The second step relates to how the building is (or the owner intends for it to be) used.
In relation to your query, we have assumed you are satisfied that your building is ‘self-contained’ and meets the step one requirement.
In relation to the step 2 requirement, you have indicated that your building is unoccupied but that it is intended to be someone’s home.
Section 5.4 of the NHCover insurers guide (‘show homes’) sets out that where a building is being used purely to showcase a product or design and that building is not anyone’s home nor intended to be lived in as a home then that building would not be a dwelling.
However, the guide also states that if, when the policy for that building is incepted or renewed, that building is on the market to be sold, and the intention is that once it is sold, it will be someone’s home and is capable of being a home, then it will be a dwelling.
You will need to determine (and be able to provide supporting information if required) whether, at policy inception or renewal, the building was intended to be (and capable of being) someone’s home or holiday home. If you confirm it was intended to be someone's home, then the building would be a dwelling under the NHI Act.
