(1) This section applies if—
(a) a builder is not the owner of the land where the builder is carrying out residential building work; and
(b) the builder fails to complete the work because the builder becomes insolvent; and
(c) the owner has paid the builder part or all of the cost of the work; and
(d) the work is insured under a complying residential building insurance policy.
(2) The owner is not entitled to recover from the insurer any amount by which the amount paid exceeds the cost of the work done.
(3) However, if the owner has paid a deposit on the work and the cost of any work done is less than the amount of the deposit, the owner may recover from the insurer the lesser of the following amounts:
(a) the amount of the deposit less the cost of any work done;
(b) the amount prescribed under the regulations less the cost of any work done.
(4) For this section, a builder is taken to be insolvent if the builder becomes bankrupt, applies to take the benefit of any law for the relief of bankrupt or insolvent debtors, compounds with his or her creditors or makes an assignment of his or her remuneration for their benefit.
(5) In subsection (3):
"deposit", in relation to residential building work, means an amount that was paid or payable by the owner to the builder, under the contract to carry out the work, before the beginning of the work.